In my previous post, I purposefully selected Germany as the case of country that would need to be kicked out of the Europe due to its fiscal irresponsibility. Surely, most of you think the situation today is just the reverse and thus it was just a bit of irony…
… well, I wanted to come to it at a later point, in this post, to share the following graphic from the Wikipedia in which you can see the hyperinflation lived in Germany’s Weimar Republic between 1921 and 1923:
Weimar Republic hyperinflation. Source: Wolfgang Chr. Fischer
The explanation in the Wikipedia is astonishing, I recommend that reading.
The situation only stabilized when the Retenmark indexed to gold bonds was introduced at the end of 1923, by then there were notes of 1,000,000,000,000 marks (and even so there were two other cases of higher hyperinflations in History, in Hungary and Zimbabwe!).
Even though during those hyperinflationary years the Weimar Republic Germany did not default, Germany did so in 1932 and 1939, being those of the latest defaults in Western Europe… later than the latest from Greece or Portugal, as can be seen in the following table.
Sovereign Defaults in Europe. Source: Reinhart and Rogoff, “This time is different”, via Credit Suisse.
Finally, you may also see in the table that now, after 72 years since the end of the Spanish Civil War, we are living the longest period since 1800 (and second longest since 1500) that Spain has not defaulted on its debt! I am not sure whether this should be a source of calmness or worry.
