Hyperinflation didn’t lead to the rise of Hitler, but it undermined the legitimacy of the democratic Weimar Republic.
Millions of disaffected middle-class voters soon drifted to various splinter parties on the right. The center hollowed out, and subsequent coalition governments ruled on a tolerated-minority basis. German politics never really regained its balance in the mid-1920s, a time of relative economic stabilization — and then came the Great Depression, government austerity packages and, ultimately, the rise of the Nazis.
Never again, the thinking goes today. And rightly so. But the fate of the euro zone depends on which historical lesson one draws from this episode. Are there circumstances in which monetizing government debt is appropriate — or not?