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?