FIGURE 5-6: Money and Prices in Interwar Germany Panel (a) shows the money supply and the price level in Germany from January 1922 to December 1924. The immense increases in the money supply and the price level provide a dramatic illustration of the effects of printing large amounts of money. Panel (b) shows inflation and real money balances. As inflation rose, real money balances fell. When the inflation ended at the end of 1923, real money balances rose.

Data from: Adapted from Thomas J. Sargent, “The End of Four Big Inflations,” in Inflation, edited by Robert Hall (Chicago: University of Chicago Press, 1983), 41–98.