View Single Post
Old 06-08-2019, 12:54 PM
Lumpy's Avatar
Lumpy is offline
Charter Member
Join Date: Aug 1999
Location: Minneapolis, Minnesota US
Posts: 16,446
Originally Posted by Schnitte View Post
1) Deficit spending and inflation. The Nazi government employed all sorts of techniques to hide the extent of public debt they were running up to finance the build-up; one of these tools were Mefo bills, whereby arms deliveries of the German industry were paid for by means of bills of exchange (a kind of IOU) underwritten by a shell company of the government. These bills could then be discounted (i.e., bought) by German banks, which would then be re-discounted (i.e., bought from the banks) by the German central bank, the Reichsbank. In effect it was an elaborate scheme to finance the build-up through the printing press, with public debt accumulating in the central bank, but in a manner that was not transparent.
I'll add that this was part of the "socialism" of National Socialism. Hitler believed that high finance was effectively an illusion, created by the Jews to gain control of the world. He saw no reason why ink marks in a ledger should prevent the German people from going back to work and lifting Germany out of the mire. At least temporarily the Nazi regime could make this look true, although it's been said that Germany went to war when it did in part because the the financing schemes were becoming untenable.