1923InflationaryCrisis

WW1

Government's high expenditure and low income from taxes

1919

Growing budget deficit

Government printing a lot of money

Inflation

Option 1

Option 2

- cut expenditure

- raise taxes

- borrow more money

- print more money

- deficit lowered

- less money in the economy

- confidence in currency, foreign value of the mark stabilised

-inflation lowered

- industry hit, umemployment grows, incomes fall

- politically unpopular, Allies argue that since government finances are improving Germany is well able to pay reparations

more money in the economy

- inflation increases

- able to maintain governemnt expenditure

- increased profits so continued investments, employers able to pay increased moeny for wages from increased prices, continued economic growth

- welfare payments maintained, economic policies are popular