If you were schooled in Australia or in the West, you learnt about the holocaust, so what caused it, who was responsible for it, who could have prevented it and how, and importantly, have we learnt from it? This piece answers those questions.
It was not caused by the Nazis or Hitler – they were a consequence of it. It was also not the Treaty of Versailles, although the massive financial reparations put on the Germans was a contributing factor. Germany was required to pay onerous reparations and faced an enormous government debt position of some 144 billion German marks by December 1918, having been a mere 5.2 billion four years earlier.
Germany had borrowed heavily to fund its war effort, and as a result the German mark steadily depreciated against the USD, from 4.2 marks per dollar in 1914 to 7.9 in 1918. By late 1919 it had depreciated to 48 marks per USD, then to about 90 marks per dollar during the first half of 1921. In early 1922 it dropped to about 320 marks per dollar, then to 7,400 marks per US dollar by December 1922, and a year later it was 4.2 trillion German marks per USD. To put this devaluation into perspective, a loaf of bread in Berlin cost about 160 marks at the end of 1922, by late 1923 it cost 200 billion. This staggering hyperinflation over such a short period of time destroyed the middle-class, wiped-out savings, and caused widespread starvation and unrest. It was a catastrophic economic collapse.
So, what caused it? It was caused by the Reichsbank, Germany’s central bank, ignoring the lessons of economic history and ignoring economic theory broadly accepted since the early 16th century. This essentially shows that prices increase in proportion with the amount of money in circulation. The Reichsbank however believed that it needed to print more money to strengthen its currency, and ran its printing presses to capacity and beyond, causing inflation to skyrocket.
Who was blamed for it? Those in power always deflect responsibility. I’m yet to learn of any government that accepted responsibility for causing an economic collapse. Who is invariably the culprit? It’s the ruler, the government. But who invariably gets blamed? That’s the money lenders and merchants. That was the case with the GFC as well. The bad guys were made out to be the bankers, but it was the US government that caused the caused the GFC. Then after various governments around the world significantly increased money supply to ‘stimulate’ their economies, which caused inflation, who got blamed for the price rises? The retailers – they were accused of price gouging. The same group, the bankers, were blamed for the economic collapse in Germany, and the same group, the retailers, were blamed for increasing prices.
The people who were hungry and angry and had their savings wiped out, wanted retribution, from those they were led to believe caused the economic collapse or took advantage of it to exploit them. Since the Jews were and had for generations been perceived as moneylenders and merchants, they were blamed.
The person who caused the economic crisis was Rudolf Havenstein, a German lawyer and judge who became the President of the Prussian State Bank from 1900 to 1908, then President of the Reichsbank (German central bank) from 1908 to 1923. His failure and that of the Reichsbank leadership and politicians to understand the effect of significantly increasing the money in the economy is frankly bewildering.
I can understand that the wrong people can be appointed to positions of authority, can be out of their depth, can be ignorant and can make terrible decisions. But where were the wise heads – at the Reichsbank, in parliament, in academia, in business, in banking? They would have known that Havenstein’s frenetic money printing would have catastrophic consequences. Anyone with even a rudimentary knowledge of economic history would have known that every major empire since the Kingdom of Lydia in circa 600 BCE collapsed after debasing its coins, its currency, to fund deficits. They would also have been familiar with the more modern examples of The Great Coin Debasement by Henry VIII and the excessive money printing in France that caused hyperinflation, economic collapse and the revolution. Students of economic history would also have known about the Quantity Theory of Money, developed some four-hundred years earlier, which showed that increasing money supply increases prices. They would also have recognised that 19th and early 20th century Europe, a period characterised by commodity-backed monetary systems including the gold standard, experienced price stability. There was no hyperinflation. Germany had been on the gold standard since 1871 and enjoyed price stability until moving from it to fund its WWI campaign.
The Reichsbank’s excessive money printing under Havenstein could very easily have been stopped – by others in government, by bankers, by the merchant class, and by other influential people. So, why didn’t those ‘wise heads’ block Havenstein’s appointment, why didn’t they stop him continuing with his money printing once it became apparent that it was causing inflation? Were they, like so many of us today, just not interested in politics? They couldn’t claim to have been ignorant, to have been unaware of the inevitable consequences of excessive money printing.
Had they stepped up, made a noise, got the Reichsbank and Weimer government to see the errors of its ways, there would have been no hyperinflation and no economic crisis, and the population would not have been hungry and angry and would not have been wanting vengeance, and wouldn’t have blamed the usual suspect, the money lenders and merchants, the industries that for generations have been associated with the Jews.
So, what have we, modern society, learnt from this? Apparently, nothing! We are still not willing to join and donate to political parties, still not willing to discuss politics in polite society, and more importantly we still have not put constraints on our government’s ability to borrow or print money. This example, the Reichsbank’s money printing, shows that considerable damage, catastrophic damage, can be done over just a couple of years – well within a single term of government.
We are just trusting our government of the day to do the right thing, not to create high inflation. Is that trust we’ve put in them well founded? It certainly is not. And even if we believe they have done and are doing the right thing, what protection do we have if a future government overreacts to a crisis with a heavy stimulus that causes high inflation or future governments progressively print and borrow more money every year to fund deficits, thereby steadily increasing the inflation rate? We have no protection. In fact, most people would welcome the ‘handouts’, the ‘free-money’, from government – just as they did during the GFC and Covid crises – but will suffer later once prices go up.
Classic Liberals is the only political party intent on constraining government’s ability to borrow and print money. Both Labor and Liberals caused inflation through excess money supply – Labor during the GFC and Liberals during Covid. If Classic Liberals had been in government that would not have happened and nor would our State and Federal debt be in the region of $1.6 trillion, it would be $NIL. If that $1.6 trillion were refinanced today, the interest bill would be about $80 billion a year. That could pay for a lot more schools and hospitals every year. The annual interest bill had Classic Liberals been in government would be $NIL.
So, the ball is in your court. What do you want? Do you want to allow government to continue overspending, or do you want measures put in place to ensure that it doesn’t overspend?
If you want to be protected against reckless fiscal management, support Classic Liberals. It is the only party intent on constraining government’s propensity for overspending. Alternatively, tell your political team to do so.
Written by Mark M.J. Morris (July 2026)