John Maynard Keynes on the Ruhr occupation and German hyperinflation in 1923-4

The famous, much-cited, but often very-poorly-if-at-all understood "hyperinflation" in Germany of 1923-4 was a product of the First World War and its immediate aftermath.

The Versailles Treaty imposed punishing reparations on Germany and drastic restrictions on its international commerce and its capacity for economic development.

France and Belgium occupied the industrial Ruhr area from January 1923 until August 1925. This heavy-handed move outraged Germans from across the political spectrum. That added to the German governments already near-impossible fiscal challenges the task of financing in the immediate postwar years. But it took off to its notoriously extreme level of hyperinflation in 1923. The hyperinflation was ended with the introduction of a new currency. And the reparations burden was relieved to a degree by the Dawes Plan of 1924 so that a stable level of prices could be maintained until the deflation caused by the Great Depression.

The great economist John Maynard Keynes had warned in The Economic Consequences of the Peace (1919) that the peace terms with the huge reparations would create enormous risks for Germany and Europe. In an article in mid-1923, Keynes From an article in mid-1923, he pointed to how the Ruhr occupation was causing even more extreme pressure on Germany inflation ("Mr. Baldwin's Prelude 07/21/1923; Collected Writings of John Maynard Keynes, Vol 18 2013 pp. 184-5):

The immediate danger, whilst diplomacy follows its slow and winding course, springs from the weakness of Germany, from the deterioration of her economic life and the present mentality of her people. The economic effect of the Ruhr occupation is cumulative, and gets worse by lasting longer, mainly because of the enormous expenditure in which the support of the Ruhr industrialists and workers involves the Berlin government. Taxing by means of inflation is now almost the only serious source of revenue. They used to raise in this way the equivalent of about £i million a week; they are now trying to raise by it nearly £3 million a week. The result is a complete breakdown of the currency, and a point may soon arrive when enough real resources cannot be raised to carry on the government and to support the Ruhr resistance, however many notes may be printed. That is to say, the Berlin government may become literally bankrupt. [my emphasis]