The German Miracle

Another excerpt from Maybury’s Penny Candy

At the end of World War II, Germany was in ruins; much of it had been bombed back into the Dark Ages.  A great deal of the housing had been destroyed, millions of workers had been killed, and the lines of transportation and communication had been demolished.  Entire cities had been leveled and whole industries had disappeared.  The money was hyper-inflated so badly that it was worthless.

Wage/price controls, which had been started by the Nazis and rigidly enforced by the Gestapo during the war and by the military governors after the war, had created a black market.  But even the black market was unable to supply the people with enough food, clothing, or other necessities.

People were reverting to barter, and they were leaving the cities to go out into the countryside where they could forage for food.  In some places the poverty and famine were so bad that the people had returned to the Stone Age.

As if all that trouble were not bad enough, Germany was overrun by immigrants, 8.5 million of them, who were fleeing from the countries that had been captured by the Russian government.

No one knew how to solve Germany’s problems; no one, that is, except a small group of economists led by a man named Ludwig Erhard.  Erhard was able to persuade the people who were governing Germany that the wage/price and other controls must be lifted.  He also convinced them that taxes must be lowered and inflation must be stopped.

Most controls were lifted, taxes were lowered dramatically, and a new, hard (noninflated) currency, the Deutschmark, was introduced.  Almost overnight things got better.  People who had been stealing and killing began working, and people who had abandoned the cities came back.  Everyone knew that their hard work would be rewarded with “hard money” and the things hard money would buy.  An eyewitness said:

Shops filled up with goods from one day to the next; the factories began to work.  On the eve of currency reform the Germans were aimlessly wandering about their towns in search of a few additional items of food.  A day later they thought of nothing but producing them.  One day apathy was mirrored in their faces while on the next a whole nation looked hopefully into the future.

Germany not only came out of the Dark Ages, but by 1960 the country had fully recovered.  By 1970, it was one of the world’s most prosperous nations.  In the short span of 25 years, the German people went from barbaric poverty and chaos to a very high standard of living, a low rate of inflation, and a low unemployment rate.

Unfortunately, the “German Miracle” was confined to Germany.  Other countries, like Britain, did not follow Erhard’s advice.  Although they ended the war in much better shape than Germany and received s much help from other countries as Germany, they have often been worse off than Germany with more inflation and unemployment. 

I read this and had to think…Wouldn’t it be wonderful to try this in America today?  Obviously we can’t immediately undo the inflation that we already have, but we could quit printing MORE money, which would help immensely.  And the taxes can certainly be lowered–in fact, lower taxes have been shown to actually raise revenues because of increased economic growth. (reference  here )  The German Miracle was such a tremendous success, one has to wonder why it hasn’t been tried again.

Could someone make sure Obama is up on this, please? 

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About dayuntoday

I'm a wonderer. I spend a lot of time mulling, pondering, and cogitating. This is just a place to park some of those thoughts.
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7 Responses to The German Miracle

  1. lookin4Jesus says:

    It’s going to be interesting…….!

  2. PreciousOnyx says:

    one of the best things that could ever to us economically would be the sudden destruction of the Federal Reserve. it’s really just a bunch of foreign bankers toying with our currency and economy to the benefit of their own private ends. a hard currency would then be possible. great story of how real capitalism works…

  3. This is something I will have to lure my dearest to read and have our own discussion.  I do not know enough about consequences regarding economics like my dearest does…  although I do know to try to avoid ANY debts of ANY kind!!

  4. dotmarie says:

    Yup that’s a great idea. I don’t see it happening in our country anytime soon though. Lowering taxes and letting the people control their own money and the economy would be so beneficial, but our government has taught people that they don’t need to responsible. On top of that, the government WANTS to be in control. They’d much rather raise taxes and do bailouts than do something proven to work, because they want to be IN CONTROL. They tax us and then offer to pay for our food and housing, and we don’t even have to work. Communism, anyone?

  5. Very interesting.  I don’t know what is to come of our country….And of course, George Walker Bush will get the blame for it all.

  6. homefire says:

    @dotmarie – Good point, Dot.  It is, indeed a control issue.  Hadn’t really thought of it quite that way.@thats_italian – Yeah, I’m glad the poor guy is out of office just so he can quit getting blamed for everything Congress does!@mjh905 – Good plan, and even more so in this time, I think!@PreciousOnyx – I know.  I even thought that the German Miracle would probably never really work unless we were totally desperate.  That would do it, I guess!  @lookin4Jesus – Yep.  Definitely.  And challenging, requiring much prayer.  Like everything else, I guess… 

  7. mrcolorful says:

    That could easily be done here if we had political leaders who care.  Unfortunately, we don’t have that.  Instead we have a class of leaders who want power for themselves and who believe that they can generate prosperity for everyone by having government control everything from wages to health care to economic production.  Bad fiscal policy can generate impressive results for a period of time, the last ten years are evidence of that, but eventually that falls apart and is replaced with recessions and depressions which are the process of the economy curing itself of its ailments.  The more unhealthy and excessive the economy was the worse the recession or depression is likely to be.  A recession can definitely be exacerbated and stretched in severity and duration through fiscal policy and possibly delayed but I am not away of any possibility of one being prevented or shortened.The problem with our economy today is not that people aren’t spending very much, though they aren’t, nor is it that people are producing as much as they were, though again they aren’t, the problem is that people at all levels of the economy have lost confidence in the economy and are altering their lifestyles to reflect that lack of confidence.  That confidence has to be restored before people will return to spending though hopefully never again spending as recklessly as they had been.

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