Foreign debt crisis punishes countries through loss of land assets and drops in production. The Treaty of Versailles in 1919 increased war reparations to 1/3 of Germany spending. The reparations were paid in the foreign currency owed. When the Germans defaulted on their debt the Belgians and French moved into the Ruhr region, Germanys heartland of production. Foreign debt had a repo effect on Germany. As production then prices increased due to domestic inflation. Germany began printing money to pay for domestic production. The printing cause hyperinflation and collapse. [Learn More ...]

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