The Great Inflation in Germany 1914 to 1923

The article treats the history of Germany’s Great Inflation from 1914 to 1923. It focusses on explaining the turning points of wholesale price trends. It demonstrates that these were mostly triggered by national and international political decisions immediately impacting the mark exchange rate. Price developments usually fell in line the following month. Money supply growth followed a steady trend upward, even in periods when the mark exchange rate remained stable or even appreciated. The author comes to the conclusion that the exchange rate, not money supply, was the pacemaker for price developments. This even holds for the turning point from galloping inflation to hyperinflation in June/July 1922.