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.