An Economic History of the World since 1400 by Donald J. Harreld takes the conventional view that the reparations Germany was obligated to pay following World War I were so large that they forced the company into an economic death spiral. The professor says that Germany was to pay $30 billion over a 70-year period that this was roughly 2X the German national income (a book that I reviewed in 2011 puts the number at 83 percent of GDP) at the time. Germany could “never hope to pay” this amount and the debt made World War II more likely.
The lectures also say that Germany made things worse by printing money to meet government expenses. [Though the Germany government stopped making reparations payments in 1933 after Hitler was elected.]
What are Americans’ best ideas in the econ department lately? Pushing government debt from its current 106 percent of GDP (already more than the Germans owed, according to the 2011 book) up and over 200 percent so that we can pay for things we want such as the Green New Deal. At the same time we will apply Modern Monetary Theory so that we can simply print more dollars whenever we need to buy something. (I like this idea, but I think it would work even better if we ask Zimbabwe to print Zim Dollars to pay for the stuff that we need/want. They’re already doing a lot of printing so if we send them some paper and ink they shouldn’t mind printing more.)
The professor himself seems unaware of this apparent contradiction. He is a Big Government, Keynesian Spending, and Welfare State enthusiast. He does point out the Keynes said that governments should spend less during boom times and that modern governments never implement this part of the theory. But he never explains why it is obvious that Germany could never pay an amount comparable to its GDP while it is simultaneously obvious that modern Welfare States can meet their debt and entitlement obligations (closer to 500 percent of GDP for the U.S. when you add in Medicare and Social Security; see this 2010 chart in the New York Times in which Greece owed 875 percent total while the U.S. was at 500 percent (i.e., the U.S. owes 5 years of GDP)).
Separately, the professor notes that the U.S. and Germany had the longest and deepest economic depressions during the 1930s and pursued similar economic policies:
The two countries hardest hit by the Great Depression were the United States and Germany—countries that hadn’t left the gold standard. And both Germany and the United States adopted several practices to stabilize their domestic economies in the 1930s that were amazingly similar. … Both countries used similar strategies to combat unemployment and poverty in their populations, including poor relief and public works programs. Both governments also set up work camps for young men from rural areas, primarily to keep them from migrating to the industrial workforce.
Countries such as England that relied on market economics came out of the Depression much faster, according to the class.