In the 1920s, Germany experienced one of the most severe episodes of hyperinflation in history. The episode originated in military defeat and revolution, produced instability that figured prominently in the onset of the Great Depression, and created policy dilemmas that present cautionary lessons for leaders in business and government. This note examines the causes, dynamics, and consequences of Germany's hyperinflation in 1923. Hyperinflation is an episode of very large price increases across a broad range of goods and services that often arises from excessive expansion of the supply of paper money to finance government expenditures. It causes wasteful distortions in the functioning of markets, including hoarding of goods and commodities, currency depreciation, capital flight, price controls, and black markets. In a self-reinforcing cycle, price increases beget greater issuance of currency, which begets more price increases and so on, until a political regime shift reforms the unit of currency and government spending.

In August 1990, Mikhail Gorbachev, president of the Union of Soviet Socialist Republics (USSR) and general secretary of the Central Committee of the Communist Party, confronted one of the most difficult dilemmas of his career: how to improve the country's economic performance. This case set highlights Gorbachev's reform efforts from 1985 to 1990. Numerous measures of economic performance had declined, and the USSR faced serious crises of economics (declining productivity and financial insufficiency), federalism (challenges to the primacy of the Soviet Union), and separatism (ethnic and nationalist agitation). Three groups of advisers offered competing plans. One plan focused on economic revolution toward a market economy; one on reform of the existing centrally planned economy; and a third on economic retrenchment and reinforcement of socialist discipline that had prevailed over the previous 73 years. Students must evaluate the benefits and risks of each alternative and recommend a course of action.

In August 1990, Mikhail Gorbachev, president of the Union of Soviet Socialist Republics (USSR) and general secretary of the Central Committee of the Communist Party, confronted one of the most difficult dilemmas of his career: how to improve the country's economic performance. This case set highlights Gorbachev's reform efforts from 1985 to 1990. Numerous measures of economic performance had declined, and the USSR faced serious crises of economics (declining productivity and financial insufficiency), federalism (challenges to the primacy of the Soviet Union), and separatism (ethnic and nationalist agitation). Three groups of advisers offered competing plans. One plan focused on economic revolution toward a market economy; one on reform of the existing centrally planned economy; and a third on economic retrenchment and reinforcement of socialist discipline that had prevailed over the previous 73 years. Students must evaluate the benefits and risks of each alternative and recommend a course of action.

In January 1933, German president Paul von Hindenburg confronted the dilemma of whom to appoint as chancellor in the midst of the Great Depression, polarization of voters, civil unrest, rumors of a pending revolution or coup d'état, and public distrust of the liberal democratic regime that arose out of the government collapse after World War I. His choice would determine the survival or demise of democracy in Germany. This case set explores why an economic crisis might prompt abandonment of a constitutional democracy, as well as how authoritarian behavior by participants in a democratic government can destabilize democracy. The main task for the students is to recommend a course of action for Hindenburg that might preserve the democratic republic. This requires an appreciation of the reasons for the fragility of the German government, including the economic crisis that it faced.

In January 1933, German president Paul von Hindenburg confronted the dilemma of whom to appoint as chancellor in the midst of the Great Depression, polarization of voters, civil unrest, rumors of a pending revolution or coup d'état, and public distrust of the liberal democratic regime that arose out of the government collapse after World War I. His choice would determine the survival or demise of democracy in Germany. This case explores why an economic crisis might prompt abandonment of a constitutional democracy, as well as how authoritarian behavior by participants in a democratic government can destabilize democracy. The main task for the students is to recommend a course of action for Hindenburg that might preserve the democratic republic. This requires an appreciation of the reasons for the fragility of the German government, including the economic crisis that it faced.