Moreover, while Germany’s currency had been stabilized after the great inflation of 1923 by tying it to the value of gold, it was by no means clear that it had been stabilized at the right level. The values arrived at were regarded as sacrosanct, however, so that the only way of dealing with a currency that became overvalued, because its reserves were being drained by a balance of payments deficit, was to cut prices and wages and raise interest rates at home.
