The factory workers were paid billions every day but it would be worthless unless they spent it within few hours.

This situation allegedly led to a mental disorder called "Zero Stroke" - people were dizzied by the amount of zeros involved, so they ended up compulsively writing strings of zeros.

Hyperinflation lessons from Germany 1914-1923.

Germany lost the World War I, the war reparations demanded by the Treaty of Versailles required expenses to be paid for with "Gold" or foreign currency equivalent.

The solution was simple or so they thought.

German banknotes were no longer redeemable in gold; they could now be covered by government bonds in place of gold. Instead of financing the costs of war and reparation through higher taxes, the government borrowed from the German population, and increasingly from the Reichsbank, which in turn printed more and more banknotes.

When you are spending more money than you are earning (fiscal deficit), the story never ends well. Unfortunately, instead of triggering economic growth they pursued policy of quantitative easing (Printing money) - 133 printing works with 1,783 machines. With so much money being printed, the mark started to lose value dramatically.

Workers once paid monthly, were now paid twice daily with stacks of notes. Every morning big trucks loaded with laundry baskets full of notes rolled out of Reichsbank printing offices and drove from factory to factory, where someone would clamber aboard to pitch great bundles to the sullen crowds of workers, who would then be given half an hour off to rush out and buy something before the money became worthless.

The German Papiermark began with exchange rate of 4.2 marks per US dollar and by November 1923 it was 640 billion marks per US dollar.

It cost about 15 billion for simple one way ride on a Berlin street car, 250 billion to buy 1 kilogram of butter, 250 million to buy loaf of bread.

Inevitably, the inequality led to social tension and ultimately to the birth of the Nazi party.  The rest is history.

Even if the history does not exactly repeat, it certainly rhymes, we can learn some important lessons from the past.

Take it easy until next time.

Note: If you are interested in this topic, recommend reading - "Lords of Finance: The Bankers Who Broke the World" by Liaquat Ahamed.

Image below: Man probably paying for loaf of bread and butter at the checkout counter.

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