Table of Contents

Political Events and Economic Ideas

Political Events and Economic Ideas

Edited by Ingo Barens, Volker Caspari and Bertram Schefold

The influence of political developments on the evolution of economic thought is the main theme behind this book. As the authors reveal throughout the book, history has shown many times that political events can trigger the formulation of new economic conceptions that in turn influence the future economic development of a country.

Chapter 5: Consequences of a Monetary System: German Monetary Reform, 1948 - the Birth of the DM and of a New Central Bank System and their Political and Economic Implications

Karl Häuser

Subjects: economics and finance, economic psychology, history of economic thought, political economy, politics and public policy, political economy

Extract

5. Consequences of a monetary system: German monetary reform, 1948 – the birth of the DM and of a new central bank system and their political and economic implications Karl Häuser PRELIMINARY REMARKS – INTRODUCTION Germany’s monetary history is a rather disorderly one. Within three quarters of a century it had to undergo three fundamental changes of its monetary system and the next one – hopefully the last one – happened two years ago, the change into the Euro-system. Germany, arising as a political unit in 1871 did not have a common national currency until the last quarter of the nineteenth century when it replaced seven different currencies of more than a dozen sovereign states by a single newly created currency, i.e. the mark. In effect, that procedure, the monetary unification of the German Reich, reminds us in some way of the establishing the European monetary unification of today, leaving aside the different historical circumstances. The new national currency, the mark, a gold-based money, worked very well up to World War I when it was suspended from gold and increasingly inflated in such a way that it ended in late 1923 due to hyperinflation. By means of currency reform the mark was replaced by a new currency, the Reichsmark (RM), which has survived a quarter of a century only when under the Hitler regime another World War was financed again in an inflationary way. This inflation together with its currency was abandoned and replaced...

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