Brüning and Weimar

Weimar Republic

Brüning expected that the policy of deflation would temporarily worsen the economic situation before it began to improve, quickly increasing the German economy's competitiveness and then restoring its creditworthiness. His long-term view was that deflation would, in any case, be the best way to help the economy. His primary goal was to remove Germany's reparation payments by convincing the Allies that they could no longer be paid.[44] Anton Erkelenz, chairman of the German Democratic Party and a contemporary critic of Brüning, famously said that the policy of deflation is a:

rightful attempt to release Germany from the grip of reparation payments, but in reality it meant nothing else than committing suicide because of fearing death. The deflation policy causes much more damage than the reparation payments of 20 years ... Fighting against Hitler is fighting against deflation, the enormous destruction of production factors.[45] 

In 1933, the American economist Irving Fisher developed the theory of debt deflation. He explained that a deflation causes a decline of profits, asset prices and a still greater decline in the net worth of businesses. Even healthy companies, therefore, may appear over-indebted and facing bankruptcy.[43] The consensus today is that Brüning's policies exacerbated the German economic crisis and the population's growing frustration with democracy, contributing enormously to the increase in support for Hitler's NSDAP.[1]