Financing | Single-family house | Feasibility | 2nd rank

The last hyperinflation in the early 1930s plunged the world into the Second World War

After 1929, there was a multi-year deflation crisis, the opposite of inflation. This drove the workers to Hitler in 1933. The German hyperinflation was in 1923 and mattered much less to the workers, as there were no savings to lose. It was the middle class that suffered.

The Fed can buy government bonds and thereby bring book money into the financial system.

And how does it become demand-effective in the "real" world from the financial sector? In 1923, this happened through the feeding of workers while production was simultaneously halted in the occupied territories on the Rhine. It was a political decision; the prerequisite for printing, not the consequence. No one converts this into mass purchasing power unless wages rise by triple-digit percentages per year or money is simply thrown out of airplanes.

And how does it come from the financial sector into the "real" world in a demand-effective way?

The paid money is credited to the selling financial institutions on their accounts at the Fed. And then they can "spend" it. The only problem is: on what? Loans and investments. Initially even good. But you quickly reach the tipping point when there is simply too much money in the system. You already mentioned 1923 – printing money to pay reparations and finance government spending. The consequences are well known due to the lack of corresponding economic output. Another example can be found in Africa in the 2000s. Zimbabwe tried the same thing. Money was printed to stabilize the economy. The same happened in Serbia, Venezuela, and others.

The difference is that in all the cases you mentioned, the governments politically ensured that money from central bank accounts reached the pockets of the masses. But this doesn't just happen automatically when banks have money at the central bank. And they don't simply feed it into the economic cycle; this does not automatically exist for the masses of people, etc.

Assuming that the state can simply cause inflation presupposes automatism where there are none. The money supply is one necessary condition among several.