In 1945, the German economy was in horrible condition. They were a country that had just been defeated by war. The new governing body was the allied control commission representing the United States, Britain, France, and the Soviet Union. Under this commission many price and wage controls were enforced. And as a result, the German economy continued to tank until around 1948. It was in 1948 - that the German minister of economics - Ludwig Erhard, simultaneously introduced a new currency (deutschmark) and abolished all controls on prices and wages. He did this on Sunday because he knew the offices of the American, British, and French occupational authorities were closed. He was afraid that if they were open, his efforts would have been countermanded by the occupiers. Within months, the German economy started booming again; and after a decade they were the strongest economy in Europe. I cant help but to point out - here we have yet another historical example of different policies for different situations #germany #friedman #economics #worldwar2 .
Posted on: Sun, 25 Aug 2013 09:47:29 +0000
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