In the 1920 the German economy collapsed as a result of B. Inflation. This inflation was so severe that it was referred to using the term hyperinflation. The cause of the hyperinflation was the massive war debt aquired by Germany as a result of the First World War. At the outset of the war Germany had removed its currency from the gold standard and borrowed heavily to finance its campaigns. The resulting debt meant that German currency was not backed by any real asset and so it lost purchasing power.