Economy of Germany

Economic Policy of Germany
Wirtschaftswunder (Economic Miracle) 1949 to1966
During the war, inflation is very high, thus cost control ar implemented by the Nazis government to control inflation. After the World War II has ended, many of Germanys economy are in a mess. 20% of all housing is destroyed as a result of Hitlers scorched-earth policy. Food production per capita is only 51% of its level in 1938. Food rationing had set in and it only gives people ab come on 1,550 calories per day, which is approximately 22 slices of unanimous grain bread per day. Technology capital of Germany is all plunder by the Allied forces which can account for close to $10 billion. Most of Germanys capital stock are destroyed during and after the war.
Ludwig Erhard, an economist who supported the concept of Soziale Marktwirtschaft, had set the pace for West Germany to regain its economic tycoon. During the 20th of June, 1948, Ludwig Erhard leads West Germany into a Currency Reformation. Reichmark has lost its power in the post-war earned run average in Germany due to the shortages in supply. People in post-war Germany are using barter system instead, which is highly inefficient. Thus, to regain the power of money, Erhard had set out to replace the Reichmark with the new Deutschemark.



the exchange lay of Deutschemark to Reichmark would be at the swan of one Deutschemark per ten Reichmark. This has wiped out 90% of the government and private debt.
Ludwig Erhard also reduces the tax revenue rates. The bodied income tax rate at that time is ranged from 35% to 65%, but Erhard made it into a flat rate of 50%. For people with an annual income of less than DM2, 400, the marginal tax rate is only 18 percent. Before the cut in tax, the income tax would be 85%. This allows the people in West Germany to invite more money to turn over on buying consumer goods and to fulfill in a bank. This tax cut had profound outcome on the economy as it leaves more income for the people to spend thus generating more demand for...If you want to get a full essay, order it on our website: Orderessay



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