The Weimar inflation experience
The Weimar Republic – the German government between 1918 and 1933 – remains the standard comparison for any situation where the combination of inflation, economic and political instability and extremism mix together in a toxic brew. There is no doubt that hyperinflation resulting from Germany’s war debts and attempts to fund resistance to the French occupation of the Saarland resulted in the impoverishment of entire swathes of the professional class, who saw their savings disappear in a situation where prices doubled on average every three days. But inflation in Weimar tended to benefit two distinct groups of people: those workers in heavily unionised industries who could use collective bargaining to leverage their wages higher to keep up with price growth (hence all those pictures of employees carrying home their wages in massive picnic hampers and wheelbarrows); and those companies and individuals who could purchase assets, including shares, using borrowed money (lent at a fixed rate) that quickly lost its value.
According to contemporary reports in the Frankfurter Zeitung, as described at the time in the New York Times, the GERMAN stock market, in those days based in Berlin, saw huge growth as a result: "The combined value of twenty-five stocks on the [Berlin stock exchange] was 5,424 in September 1919, rising to 7,792 at the beginning of January... and to 15,362 at the end of 1920.” That threefold increase represented investors with spare capital placing everything in the stock market as a hyperinflation hedge. There were solid reasons for doing this as the market’s key companies, such as the industrial giant IG Farben, or Krupp, were also handed advantages by the onset of runaway price growth – at least at first.