1923 - The Rentenmark
is adopted as the official currency of Germany in order to counter hyperinflation.
In particular, TZ argue that it was the backing of the rentenmark by real estate revenues that ended the hyperinflation.
The problem with TZ's argument that the German hyperinflation was ended by fiscal measures (namely, backing the rentenmark by real estate revenues) is that it ignores the fact that the mortgage-backing of the rentenmark was not sufficient to change expectations of further inflation, although it did help the public accept the new currency.
The RKA was the successor to the German Rentenbank that had been created to underwrite the interim currency, the Rentenmark
, after the hyperinflation.
It merely implies that in order for the new money to be used in economic calculation, there must be an existing price system in place upon which the new money can be superimposed, which was clearly the case with the Rentenmark
13) Even after the new currency, the Rentenmark
, was introduced in November 1923, the socioeconomic crisis did not immediately improve, since national and local governments continued to reduce budgets and eliminate many social services.
169) The Rentenmark
had the exchange rate of 1,000,000,000,000 old German marks to 1 Rentenmark
Note that these sums cannot be compared with those in footnote 6 because, following the hyperinflation of the early 1920s, a new currency, the Rentenmark
(RM, later Goldmark) was introduced in 1923.
The bank came into existence on 15 November 1923 as the Rentenbank, but with a rentenmark
deposit convertible to gold at the prewar value.
Successful monetary stabilization required more than simply pegging the mark's external value by sale of foreign exchange (which had been tried before) and the introduction of the rentenmark
in November 1923.
The conversion rate from the old to the new money was one trillion paper marks for one Rentenmark
This arrangement mirrored Germany, in which the gold-based rentenmark
circulated alongside the floating fiat papiennark, and Russia, where the gold-based chervonets circulated alongside the fiat ruble.