Germany doesnt default on its loans in 1934

As it says. What would the effects be if the Germans decided not to default on their loans in 1934. A rapidly progressing FOREX crisis ended with the Germans partially defaulting on their debts writing of a quarter and changing another quarter that was payable in FOREX into loans payable in Reichsmark.
The crisis had been precipitated by a bad harvest, international foreign trade crisis, but most of all the increasing government spending in Germany. As such the crisis may seem unavoidable, but the fact of it is that the defecit was controlled AFTER the crisis by import restriction and clearing agreements with trading partners.
Lets assume these measures were implemented before the crisis necessiatetd a default, perhaps slightly slowing Down rearmament before the crisis, but averting the temporal import shotdown in 1934.
The longer term effect would be that Germany retained credibility. What happens then as the economic miracle progresses in Germany and there is crisis elsewhere?
Would cash (loans) flow from US and other countries to Germany resulting in an improved purchasing power from 1935-6 and onwards? ANd an exacerbated crisis in US and Europe as less Cash is invested at home?
Downside is off course the increased debt, but the Germans would not pay it back after 1939-41 anyways...?

PS. Inspired by J Von Axels TL on the ASB forum.
 

samcster94

Banned
As it says. What would the effects be if the Germans decided not to default on their loans in 1934. A rapidly progressing FOREX crisis ended with the Germans partially defaulting on their debts writing of a quarter and changing another quarter that was payable in FOREX into loans payable in Reichsmark.
The crisis had been precipitated by a bad harvest, international foreign trade crisis, but most of all the increasing government spending in Germany. As such the crisis may seem unavoidable, but the fact of it is that the defecit was controlled AFTER the crisis by import restriction and clearing agreements with trading partners.
Lets assume these measures were implemented before the crisis necessiatetd a default, perhaps slightly slowing Down rearmament before the crisis, but averting the temporal import shotdown in 1934.
The longer term effect would be that Germany retained credibility. What happens then as the economic miracle progresses in Germany and there is crisis elsewhere?
Would cash (loans) flow from US and other countries to Germany resulting in an improved purchasing power from 1935-6 and onwards? ANd an exacerbated crisis in US and Europe as less Cash is invested at home?
Downside is off course the increased debt, but the Germans would not pay it back after 1939-41 anyways...?

PS. Inspired by J Von Axels TL on the ASB forum.
The Nazis were terrible economists, I can imagine them not recovering as quickly.
 
Hitler's still in power, they'd pull something else somewhere down the line.
However, if they somehow didn't default, they'd suffer through the 30's similarly to the Weimar days.
 
The Nazis were terrible economists, I can imagine them not recovering as quickly.

Hitler's still in power, they'd pull something else somewhere down the line.
However, if they somehow didn't default, they'd suffer through the 30's similarly to the Weimar days.
I’m not so sure. See, they reached the default because of a forex deficit, a deficit they could prevent short time later.
What I imagine is that they could compensate and more for the extra payments of interest with simply taking up new loans.
Net effect would be better access to forex, and a larger debt, but who cares about that when war breaks out.
 
interesting, so there's a possibility that Germany would be better off overall, just with a much larger debt??? Is this similar to the modern-day US economy with an enormous debt?
 
interesting, so there's a possibility that Germany would be better off overall, just with a much larger debt??? Is this similar to the modern-day US economy with an enormous debt?
Better of is a relative term, but by maintaining credibility the us government have obtained low interest lians and maintained government spending more than otherwise possible. Exactly the same thing the Germans would want in the 1930’s.
 
Better of is a relative term, but by maintaining credibility the us government have obtained low interest lians and maintained government spending more than otherwise possible. Exactly the same thing the Germans would want in the 1930’s.
I see, but my real question is, regardless of whether or not the Germans win the war, what will happen to the debt after world war 2?
 
I see, but my real question is, regardless of whether or not the Germans win the war, what will happen to the debt after world war 2?
Some of it will be debt to the British and French who will have to have been defeated, so there will be an understanding in that regard. However, the most part will be debt to the US. The US had the most Capital and with a slow domestic economy they were lending out a lot of Money abroad (an interesting butterfly is an even deeper crisis in the rest of the World. There will be less Investment Capital). Presumably, absent a war to the US which is probably what is imagined when the loans are accepted, they will have to be paid back. But we are talking about a very different situation. Germany would argue (and others bound by treaty not to argue against) that they have been facing extraordinary circumstances and therefore should have lenient repayment terms. Or that the defeated countries will have to pay.
 
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