Why did printing more money lead to hyperinflation in 1920s Germany?

In the 1920s, Germany (the Weimar Republic) experienced hyperinflation primarily because the government attempted to pay for massive internal and external financial obligations by simply printing more money rather than through taxation or economic growth.

The situation was driven by a few key factors:

• War Debt: Germany entered the 1920s with significant debt from World War I. The government had financed the war largely through borrowing rather than taxes, expecting to pay it back with reparations collected from the countries they expected to defeat.
• Reparations: The Treaty of Versailles imposed heavy reparations payments that had to be paid in foreign currency or gold, not the devalued German Mark. To acquire this hard currency, the government printed more Marks to buy foreign money, which flooded the market and drastically lowered the value of the Mark.
• The Occupation of the Ruhr: In 1923, when Germany defaulted on coal deliveries, French and Belgian troops occupied the Ruhr, the country’s industrial heartland. The German government called for "passive resistance," urging workers to strike. To support these striking workers and their families, the government printed even more money to pay wages while production in the factories effectively halted.
• Loss of Confidence: As the supply of money exploded, the scarcity of actual goods (due to the Ruhr occupation and overall industrial decline) caused prices to skyrocket. This created a vicious cycle: as prices rose, the government printed even larger denominations to keep up, which further devalued the currency.

The public quickly lost faith in the currency. Because the money was losing value by the hour, people spent it as soon as they received it, which increased the velocity of money and pushed prices even higher. This cycle eventually collapsed the economy until the currency was replaced in late 1923.