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Apocalypse 2012

Quiz: CNBC QUIZ: Financial Doomsday

Question 1 of 10

What was the highest monthly rate of inflation in Germany in 1923?

  1. 2,950%
  2. 29,500%
  3. 295,000%
  4. 2,950,000%
Correct!

After World War I, a defeated and war-torn Germany was required by the Treaty of Versailles to pay reparations. The treaty stipulated that Germany could not pay with its own currency, which had been backed by years of borrowing, but with a solvent foreign currency or an asset such as gold. However, Germany simply bought the foreign currency with its own debt-laden currency, devaluing it further.

By 1923, German currency was so diminished that the nation began to experience unprecedented inflation. The highest monthly rate was approximately 29,500%, which meant that prices rose almost 21% each day, or that the $5 container of milk that you bought on Monday would cost $6 on Tuesday and $10 on Thursday. The economic situation led to widespread poverty, which most historians believe created conditions miserable enough for the Nazis to take power.