A Template for Understanding Big Debt Crises

by Ray Dalio

unwelcome development for policy makers because a falling mark was considered essential to maintaining German export competitiveness, supporting employment growth, and building a savings pool of hard currency earnings. It was considered the “one good fortune in the midst of misfortune,” without which Germany would lose the possibility of exports.50 The initial appreciation hit exports hard, with the chamber of commerce going as far as to say that industry had practically “ground to a halt.”51 Unemployment surged, with the number of trade union members reported as unemployed tripling. For these reasons, the economic ministry intervened between March and June 1920—aiming to deliberately depress the mark and stimulate employment. It worked. The mark fell, competitiveness returned, and unemployment once again began to decline.