Explainers
What Caused Hyperinflation in Weimar Germany?
By Joel Perkes · · 11 min read
Picture redecorating the living room in 1923. You measure the walls, mix the paste, climb the stepladder, and then you notice the cheapest wallpaper in the house is sitting in your wallet. Somebody in Germany did exactly that, and a photographer took a picture of it, because a roll of real wallpaper now cost more than the money it would take to cover the same wall.
Weimar Germany’s hyperinflation was caused by a government printing money to pay bills it could not cover with taxes or borrowing. The bills came in three waves: first the debts of World War I, then reparations to the Allies, then wages for striking workers after France and Belgium occupied the Ruhr in January 1923. A dollar cost 4.2 marks in 1914 and about 4.2 trillion marks in November 1923. It ended when Germany introduced a new, strictly limited currency, the Rentenmark, on November 16, 1923, and cut twelve zeros off every price.
How bad was hyperinflation in Weimar Germany?
Start with the exchange rate, because it is the cleanest thermometer. In 1914 a US dollar cost 4.2 German marks. By late 1919 it cost 48, in the first half of 1921 about 90, and by the middle of 1922 about 320, which is already a currency having a very bad few years. Then the bad few years turned into something nobody had a word for yet.
By December 1922 the dollar cost 7,400 marks, and by November 1923 it cost 4,210,500,000,000, a price with more digits than a phone number, for one dollar. A single US penny cost about 42 billion marks. For once in its life, the penny was the rich one.
Bread makes the same point at the kitchen table. A loaf in Berlin cost around 160 marks at the end of 1922 and around 200 billion marks by late 1923. Now take a man who had a million marks in 1914, about $238,000 at the time and enough to retire on. By late 1923 his million bought one two-hundred-thousandth of that loaf: a crumb you’d brush off the tablecloth without noticing. Meanwhile, anyone paying in dollars got the same loaf for about five cents. The bread hadn’t gotten more expensive. The money had gotten smaller.
Economists Steve Hanke and Nicholas Krus, who compiled the standard table of the world’s hyperinflations, put Germany’s worst month at October 1923: prices rose 29,500% that month, about 20.9% a day, and doubled every 3.7 days. That is almost 1% an hour, so a factory worker’s pay lost about 6% of its value between clocking in and clocking out, and the smart move was to get paid at noon and have it spent by supper. A sandwich that cost a week’s pocket money on Monday cost two weeks’ by Friday, and the kid who ate it on the way home had the right idea.
What caused the hyperinflation?
Three bills arrived, one after another, and each was paid the same way.
The war. Germany paid for World War I mostly with borrowed money rather than taxes, expecting to win and send the bill to the losers. It lost. The mark had already fallen from 4.2 to about 7.9 to the dollar by the end of the war. The government was left with enormous debts in its own currency, the kind a government can shrink by making more currency.
The reparations. In May 1921 the Allies set Germany’s reparations at 132 billion gold marks in the London Schedule of Payments. Unlike the war debt, this bill could not be paid in freshly printed paper marks. It had to be paid in gold, foreign currency or goods. To buy those, the government sold marks for dollars and pounds, pushing the mark down, which made the next payment more expensive, which meant selling more marks. It was a treadmill that sped up every time you stepped on it.
The Ruhr. In January 1923, after Germany fell behind on deliveries, French and Belgian troops occupied the Ruhr, Germany’s industrial heartland, to collect coal and goods directly. Berlin called for passive resistance: workers in the region stopped working, and the government kept paying them. It had no tax revenue to do that with, so it printed the wages. Output collapsed at the same moment the money supply exploded, which is the exact recipe for prices to leave the planet.
How did the government print so much money?
With help. The state printing works couldn’t keep up, so by the fall of 1923 more than 130 private printing firms were producing banknotes, according to the German History in Documents collection. By the end, notes came in denominations that sounded like astronomy, with a 100-trillion-mark note at the top, and the paper and ink were worth more than the number printed on them.
The central bank, the Reichsbank, defended all of this as a response to the falling exchange rate rather than a cause of it. The money printers, in its telling, were just trying to keep up with prices. This is like a man in a rowboat explaining that he is only bailing water into the boat because the boat keeps filling up.
Into the weeds: who gained and who lost
Hyperinflation is a giant transfer from people who are owed money to people who owe it. Anyone with savings, a pension, a life insurance policy or a fixed rent coming in was ruined. Anyone with a mortgage or business loan in marks could repay it with a handful of worthless notes. Owners of land, factories, foreign currency and gold kept their wealth, because those things were not marks. The middle class, which had done what it was told and saved in marks, took the worst of it, and many historians trace the political anger of the following decade partly to that experience.
What was life like during the hyperinflation?
The German History in Documents archive includes a 1923 photograph titled “Wallpapering with worthless banknotes,” which is the scene from the top of this page. When prices double every few days, a paycheck is like an ice cream cone in August: you can enjoy it now, or you can hold it and watch it shrink, and nobody has ever saved one for the weekend.
Prices stopped meaning anything as numbers. People thought in loaves, in dollars, in eggs, in lumps of coal, in anything that would still be worth the same tomorrow. A number on a price tag became like a weather forecast: true when it was printed, and nobody’s fault if it’s wrong by lunch.
What happened to gold during the hyperinflation?
Gold did not get more valuable. The mark got less valuable, and gold stood still while everything priced in marks ran past it. Before the war, gold was fixed at $20.67 an ounce and a dollar cost 4.2 marks, so an ounce cost about 87 marks. In November 1923, with the dollar at about 4.2 trillion marks, that same ounce cost about 87 trillion marks.
That is a rise of exactly a trillion times, for an ounce of metal that did nothing at all. (If a trillion is hard to picture, our explainer on how much a trillion dollars is turns it into a ten-hour drive.) A family that kept one gold coin in a drawer in 1914 still had one gold coin’s worth of value in 1923. A family that kept 87 marks in the bank had enough for about a trillionth of an ounce of gold, a speck you would need a laboratory, a microscope and a very patient technician to find.
How did Germany stop the hyperinflation?
By starting over with a currency that came with a hard limit. On November 16, 1923, Germany introduced the Rentenmark, nominally backed by a mortgage on the country’s land and industry and linked to the old gold mark. One Rentenmark replaced one trillion paper marks, and twelve zeros came off every price at once, like a garage sale where the whole driveway gets a new sticker.
The backing was more symbolic than practical; nobody could walk in and claim a slice of a farm. What made it work was the limit. The government promised to issue only a fixed amount and, this time, kept the promise, and the central bank stopped lending to the state. The exchange rate settled at 4.2 Rentenmarks to the dollar, the same 4.2 as in 1914, like a thermostat finally turned back to where it was before the kids got hold of it. The hyperinflation that had taken years to build was over in weeks once the printing actually stopped.
Into the weeds: the people and the paperwork
Hjalmar Schacht, the new currency commissioner, became head of the Reichsbank after its president, Rudolf Havenstein, died on November 20, 1923. A law of August 30, 1924 swapped the paper marks into a new Reichsmark.
Did other countries have hyperinflation after World War I?
Yes, and some were worse. Austria went first: Hanke and Krus date its hyperinflation from October 1921 to September 1922, ended by a League of Nations loan with strict conditions on spending and money printing. Hungary had one in the 1920s and then set the all-time record after World War II: in July 1946, Hungarian prices doubled about every 15 hours, until the pengő was replaced by the forint. That is roughly three times as expensive every day. Sit down to a long two-hour lunch in Budapest and the same meal would have cost about 10% more by dessert: a rare restaurant where the check grew while you waited for it, and it wasn’t the waiter’s fault.
Zimbabwe printed a 100-trillion-dollar note in 2009, then chopped the zeros off its currency three times. The details differ, but the plot repeats. A government with bills it cannot pay, a central bank that agrees to print the difference, output falling at the same time, and an ending that only arrives with a new currency and a limit that is actually enforced.
Could this happen in the US?
Here is the fair answer, without the doom. Hyperinflation, in Hanke and Krus’s definition, means prices rising at least 50% in a single month. It is rare, it has always needed an extreme combination, a government financing most of its spending by printing while production collapses, often after a war or a revolution, and the United States is nowhere near that. US consumer prices peaked at 9.1% over a whole year in June 2022. That was painful. In October 1923, German prices rose more in a single day than US prices rose in that whole year.
The useful lesson from Weimar isn’t “it could happen here next year.” It is the mechanism, which works at any speed. When a government pays its bills by creating money, the cost lands on whoever holds the currency, quickly or slowly. The slow version is called ordinary inflation, and our dollar value calculator shows what it has done to a dollar since the year you were born. The fast version ended up on a wall in 1923, with paste behind it, because it was cheaper than the wallpaper.
Sources
- Exchange rates (4.2 marks per dollar in 1914 to 4,210,500,000,000 in November 1923), bread prices in Berlin, the London Schedule (132 billion gold marks), the Ruhr occupation, the Rentenmark (November 16, 1923, twelve zeros) and the Reichsmark law of August 30, 1924: Wikipedia, “Hyperinflation in the Weimar Republic”.
- Peak month, monthly and daily rates and doubling times for Germany, Austria and Hungary: Steve H. Hanke and Nicholas Krus, World Hyperinflations table (Cato Institute).
- Private printing firms and the wallpaper photograph: German History in Documents and Images.
- US consumer price inflation peak, 9.1% in the year to June 2022: Bureau of Labor Statistics.
Figures read October 24, 2026. Our own arithmetic: the gold price in marks ($20.67 an ounce times the dollar exchange rate); a penny at 4.21 trillion marks to the dollar; a million 1914 marks at 4.2 to the dollar and against a 200-billion-mark loaf; the loaf in dollars; the hourly and per-shift rate from a 3.7-day doubling; and the daily and two-hour rate from Hungary’s 15-hour doubling.
Questions people actually ask
What caused hyperinflation in Weimar Germany?
The government printed money to pay bills it could not cover with taxes: the debts left over from World War I, reparations owed to the Allies, and in 1923 the wages of workers striking against the French and Belgian occupation of the Ruhr. Output fell at the same time the money supply exploded.
How much was a dollar worth in German marks in 1923?
In November 1923 one US dollar cost about 4.2 trillion marks (4,210,500,000,000). In 1914 it had cost 4.2 marks.
How fast did prices rise in Weimar Germany?
At the peak, in October 1923, prices rose about 29,500% in a month, roughly 20.9% a day, and doubled every 3.7 days, according to Steve Hanke and Nicholas Krus.
How much did a loaf of bread cost in 1923 Germany?
About 200 billion marks in Berlin by late 1923, up from around 160 marks at the end of 1922.
Did people really use money as wallpaper?
Yes. A 1923 photograph in the German History in Documents and Images collection is titled “Wallpapering with worthless banknotes.” The notes were worth less than the paper they were printed on.
How did Germany end hyperinflation?
It introduced a new currency, the Rentenmark, on November 16, 1923, at one Rentenmark for one trillion paper marks, and strictly limited how much could be issued. The central bank stopped lending to the government, and prices stabilized within weeks.
What happened to gold during Weimar hyperinflation?
An ounce of gold went from about 87 marks before World War I to about 87 trillion marks in November 1923, because the mark collapsed while gold held its value. People holding gold, land or foreign currency kept their wealth; people holding savings in marks lost it.
Which country had the worst hyperinflation ever?
Hungary, in July 1946, when prices doubled about every 15 hours, according to the Hanke-Krus table. Germany’s 1923 hyperinflation is the most famous, but not the most extreme.
Could Weimar-style hyperinflation happen in the United States?
It would take an extreme combination that the US is far from: a government paying most of its bills by printing money while production collapses. US inflation peaked at 9.1% over a full year in June 2022, compared with 29,500% in a single month in Germany in October 1923. The mechanism is the same at any speed, though: money created to pay government bills lowers what each unit buys.
