German Economy Under The Morgenthau Plan

low labor costs in dollar terms, not low labor costs in DM terms. I was replying to an inquiry that the devalued DM would drive up the price of imported steel and therefore not make German made refrigerators cheaper.

Devalued currency is hardly a cure-all. Weak currencies have problems of their own.
 
Exchange rates are what maintain the balance of money going in with the money going out.

I know what exchange rates are and how they work. Although they help you sell abroad they also cause very high inflation and very low investment when it is excessive.
 
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Perhaps you ought to remember the near worthlessness of Wiemar Germany's currency's weakness was a compounding factor in the rise of the Nazis before you parade devaluation and inflation as good things?

I'd also point out if you remember that the Morgenthau Plan was All The Little Germanies making a return, and the more you break up Germany the more attractive that communism becomes, and hey, the Soviets were harsh in their reparations but you know what? They rebuilt and 'unified' all those places they 'liberated' too, including the OTL GDR so... A lot of those Little Germanies would last as long as the bid to join TTL's Warsaw Pact.

/I am not well versed in the nuances of modern German history goes here.
 
This Germany would be a defensive nightmare vs the Soviets. Essentially a highway straight to the Rhine. There would be far less East Germans fleeing to the West, and maybe even some going the other way. Germany won't be rebuilding fast, or provide much resistance to any Soviet offensives. The US would have to perform the entirety of the defence, and that won't stop USSR tank armies. The only thing that keeps them from rolling over Europe is nukes, and they will develop their own by 1949. Even if it doesn't lead to outright war, the USSR has a far stronger hand diplomatically.
 
I can understand doing this as a dystopia but as a good idea? Everything turned out very well, Europe is well off, including the Germans, without a Fourth Reich coming into being. Getting revenge would not have been worth the price, particularly considering how well everything turned out.
 

kernals12

Banned
Perhaps you ought to remember the near worthlessness of Wiemar Germany's currency's weakness was a compounding factor in the rise of the Nazis before you parade devaluation and inflation as good things?

I'd also point out if you remember that the Morgenthau Plan was All The Little Germanies making a return, and the more you break up Germany the more attractive that communism becomes, and hey, the Soviets were harsh in their reparations but you know what? They rebuilt and 'unified' all those places they 'liberated' too, including the OTL GDR so... A lot of those Little Germanies would last as long as the bid to join TTL's Warsaw Pact.

/I am not well versed in the nuances of modern German history goes here.
A 30% or so devaluation of a currency is not a big deal. Britain did it in 1949.
 
My immediate thought would be that the Berlin Wall would be built as a desperate attempt to stop people fleeing East.

 
That idea was based on economic illiteracy. As Adam Smith pointed out, countries can trade so as to specialize in whatever they were most efficient at producing. Modern Germany happens to be very good at making cars, but not very good at making airplanes. So it buys airplanes from France and America and sells them cars in exchange. And so it would be if Germany was banned from having heavy industry.

You really mean Ricardo. Comparative Advantage and all that.

The problem here is that your average German would have two options: emigrate, or work at a subsistence wage. The result would be a brain drain of quite epic proportions. This turns Germany's Comparative Advantage into... growing food. Which basically turns Germany into Latin America.
 
You really mean Ricardo. Comparative Advantage and all that.

The problem here is that your average German would have two options: emigrate, or work at a subsistence wage. The result would be a brain drain of quite epic proportions. This turns Germany's Comparative Advantage into... growing food. Which basically turns Germany into Latin America.

To be fair that was the point of the whole scheme. To turn Germany pastoral. For that to happen it needed to depopulate.
 
To be fair that was the point of the whole scheme. To turn Germany pastoral. For that to happen it needed to depopulate.

Oh, I realise that. I was addressing the OP's bizarre notion that Germany would simply opt for a flourishing future of light industry... rather than suffering something where the closest analogy would be the policies of the Khmer Rouge.
 
It is for a place that's been destroyed down to the bedrock and then broken up into many places and occupied in near totality.

Besides, it would need much more than a 30% devaluation to compete. The US is mass-producing everything while Germany would be reduced to anything it can produce through cottage industry.
 
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