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pedrito_elcabra

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I wonder if this subject is modeled in some way in HOI4.

When the Nazi party seized power, they went into a crazy cycle of spending and building, in order to raise the population's mood and to stimulate the economy. It worked, and many german workers got their first holidays in a decade under the NS system.

At the same time though the German state was running a serious deficit from 1933 on. The arms industry would supply armaments through a special system of 'state bonds', which at the same time allowed to hide the massive military build up and to pospone the payment for the armaments to a later date. Reserves were running out quickly, Germany had little prospect of attracting investors due to their policies, and in general the predictions were bankruptcy in a near future.

For these reasons the diplomatic successes from 1936 to 1939 were a multiple bonus to the Reich. They gained new land and resources, they recovered their dismal prestige... but really most importantly they managed to pospone their inevitable bankruptcy a little longer. For the first thing the Nazis did in any newly annexed territory was not to pursue their ideological goals, but to sack the central banks and get a hold of anything of value they could reach.

There never was a scenario in which the Nazi party kept ruling and did not declare war.

German policy was a constant escape forward from an economic point of view. It's hard to tell wether Hitler was aware of this, but the more technically involved people in his entourage certainly were.

In computer games though it's often possible to play on without going to war in 1939, or at all. Germany gets more than a few unrealistic bonuses to allow them to perform close to a historic level because the real reasons for their early success are hard to quantify and simulate in a game.

Playing a peaceful Nazi Germany game can seem like the smart choice given their strength. But it would not have been a real option back then.

So I wonder, does Germany get any kind of events or penalties for NOT being constantly expanding after 1936?
 
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EleventhAvenue

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I can't say that I'm an expert on this area, but based on what I know of it, I agree with you, it should be perfectly reasonable to have some kind of ''German crash'' happening. Just like the USSR gets Trotskyite plots if they don't purge, a Germany that is passive, not anschlussing and annexing, should get an economical crash. This should leave Germany severely weakened in a way that balances out potential alternate WW2's, such as the USSR trying to spread the world revolution by going at the allies and (weakened) axis, or the allies/little entente fighting against the allied (weakened) axis and an anti-imperialist USSR.

Another possibility would of course also be that the crash could lead to a civil war, with germany either turning communist or democratic.

Finally, yet another possibility might be a Germany turning away from that economic policy, but that should probably require a change of government, and maybe lead to locking out focuses (no reichsautobahn, no massive state funded work places) and unrest.
 
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Mutagen_Prime

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AFAIK HOI4 doesn't model an in-game economy in any form or capacity excluding the trade of civilian factories for sake of supply or resource aquisition.

Still, would be a pretty awesome/unique mechanic for the German player in terms of instilling a sense of overwhelming urgency where regards the conquest of territory to keep your massive, bloated military afloat.
 
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jcd000

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I'd like to see the economy crash and maybe even civil war or gov't capitulation for Germany if they fail to frequently expand, but keep up military buildup.
 

joe9594

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I dont really know if this would affect the industry of Germany very much. Chances are the Govt could just take a firmer grip on industry to maintain it (after all the USSR had a much larger army without higher substantially GDP). It would be more accurate to simulate this via national unity and unrest problems.
After all as Hitler often said "Inflation is only a number".
 

Percster

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They could have dropped §31 of the Reichsbankgesetz which defined the RM's convertibility into gold, thereby massively reducing the need to acquire and hold gold as well as foreign currency reserves. Being the sole legal issuer of the RM, the German government would have increased its domestic policy space quite significantly without the need to fudge around with MEFOs and other forms of Tax Anticipation Notes. Whether or not this would have been possible polically is another matter entirely.

Germany would still have been constrained by real resources (raw materials, productive capacity, labour, etc) as well as any required imports, but authoritarian regimes are quite capable of curtailing private demand (aka rationing) enough to make a lot of resources available for public needs, in this case the military. That's partly what taxation is all about, beyond creating demand for your currency: it frees up resources for the government to acquire.

Basically, as long as you
  • don't have to spend copious amounts of your currency to maintain an exchange rate with another currency or to import goods beyond what you export,
  • keep aggregate demand, public and private, from outpacing available resources,
  • manage to avoid bidding wars for scarce resources,
inflation is not something you have to worry about, no matter how large the public deficit -- if it is in your own, sovereign currency. Nor do you have to worry about insolvency, given that you are the issuer of the currency in the first place. And you don't need investors to lend you back your own IOUs either, for obvious reasons.

However, suppressing private demand creates a lot of problems in the long run, yet war tends to create a whole lot of more pressing issues anyway. You can only maintain full economic moblisation for so long before everything goes pear-shaped.
 
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jcd000

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Afaiu, it's not just private demand, you got to be able to live with what you can produce if there can be no trading with other countries, as a result of debt, deficits and lack of tradeable goods. Trading technology for rare materials and oil can only work for a limited time...

But sure, if you step down a bit on military buildup, ration to free enough resources for trade AND you have nations willing to trade with you, it may work for a bit more. Just don't expect as many stunning military successes, if it comes to war.

In my eyes Nazi Germany is exactly the product of Nazi policy and philosophy:
Basically throw all resources to the military, then use this military to expand and cover up for the deficits this creates, plus further expand the military.
Do this until you blob as much as you can.
After that exploit the conquered non-ethnic-German areas to sustain a military-enforced ethnic-German elite.

If Germany had the required critical mass and/or even more reluctant opponents, it might have worked too.. until the eventual implosion.

To model most of this though, you'd need another game (vicky style maybe?) and a much greater timeline.
 
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pedrito_elcabra

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I dont really know if this would affect the industry of Germany very much. Chances are the Govt could just take a firmer grip on industry to maintain it (after all the USSR had a much larger army without higher substantially GDP). It would be more accurate to simulate this via national unity and unrest problems.
After all as Hitler often said "Inflation is only a number".

The difference between the economies of the USSR and Germany are manifold, first and foremost the USSR had virtually no need to import any resources, while Germany with 1936 borders is lacking many key resources including iron, oil, and rare metals.

Also the USSR was an extremely centralized state, with Moscow controlling every little detail of the economy. Germany on the other hand was way more decentralized than many people think - the whole marching in formations was a beautiful act to make the country appear united and monolithic, while the underlying organization was mostly disastrous, especially on the economic level. Hitler wasn't much of an organizer, and he wouldn't really let anyone else centralize the economy until he appointed Speer as minister of armaments, 3 years into the war. One of the few fully centralized organizations with an economic scope was the SS, and as you can imagine their focus wasn't consumer goods.

They could have dropped §31 {...} However, suppressing private demand creates a lot of problems in the long run, yet war tends to create a whole lot of more pressing issues anyway. You can only maintain full economic moblisation for so long before everything goes pear-shaped.

Very informative post. They might have been able to skirt by using these tactics if they had not pushed such a massive rearmament - but in 1936 this was already in full swing and stopping it at that point would have made no friends in the military, and led to another economic crisis because of the loss of jobs. I don't know from the top of my head the number of jobs created in the armaments industry by the Nazis, but it was a very large number compared to the rather modest but often cited Reichsautobahn program.

All in all, if there was an option to 'disarm' as Nazi Germany, I wouldn't mind, provided it came with enough additional unrest. What doesn't seem realistic to me is that Germany keeps a large and modern army without expanding and without economic collapse.

Probably increasing unrest as the years pass by and Germany stays at peace would sufficiently represent the reality.
 
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Also the USSR was an extremely centralized state, with Moscow controlling every little detail of the economy. Germany on the other hand was way more decentralized than many people think - the whole marching in formations was a beautiful act to make the country appear united and monolithic, while the underlying organization was mostly disastrous, especially on the economic level. Hitler wasn't much of an organizer, and he wouldn't really let anyone else centralize the economy until he appointed Speer as minister of armaments, 3 years into the war. One of the few fully centralized organizations with an economic scope was the SS, and as you can imagine their focus wasn't consumer goods.

Yeah as part of his deal with the military-industrial complex, Hitler specifically dropped all nationalization talk and purged out those in the party who actually though "national socialism" was a real thing. The suckers really thought that they the brownshirts were going to replace both the tycoon organized industrial complex and existing military structure (basically intact since post-Napoleonic wars). If Hitler didn't cut that deal the army and industrial tycoons would never have let him take power and certainly wouldn't of let him get as far as the Rhineland occupation or Czech crisis, and the fallout is some kind of prolonged civil crisis if Hitler's removal sparks rebellion, but certainly imminent foreign aggression isn't happening.
 

Caesar15

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"The reason the American Army does so well in wartime, is that war is chaos, and the American Army practices it on a daily basis."

Ah, there we go. There's this also:

mz9AClq.png
 
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Raptor83

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Economic problems of Germany werent unique (but appeared relatively early, compared to other nations) in WW2 era - for example, UK (and quite a few other nations) was effectively bankrupt at the end of war and needed rescue from USA.
 

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As I see them, the main difference between the communist and the nazi economic perspectives, was:

The soviets thought the economy in terms of marxist theory of accumulating capital, that is to say, to increase the industrial base as a step towards the rise of individual income, (with a centralized direction, and also with a goal of increasing military spending). This increase in military spending could have an aggressive finality, but the declared intention of the soviet state was pacifist, in the sense of being armed for being able to defend the home of the revolution, and to help fellow workers of other countries in their overthrowing of oppressing elites. In that sense their increase in military spending had a long term perspective.

The nazis thought their economic goals as the short term steep increase of military spending (financed in part thanks to the plundering of ethnic minorities within the State), followed by a series of aggressive wars of conquest and plunder, with the final intended result of having an economy very much like that of a slave state. This was unsustainable in the long term for two reasons, the first the evident lack of essential raw materials such as oil, rubber, copper, grain, etc... (which led for instance to the disastrous campaign of Stalingrad in search of soviet oil). The second was that the nazi state had nothing to offer to the subjugated population, with the logical result of growing civilian resistance all over the conquered countries against the nazi regime.

There is a further reason of the failure of the Axis, and is the control by the allies of the sea lanes of world trade, exemplified by the convoys which feed the British and American war effort. As long as America and the Commonwealth had the ability to keep open the world trade open to themselves and closed to the enemy, the result of the war could only have one end, and it was the defeat of the Axis, because they could keep their industrial effort indefinitely without the hindrance of lacking raw materials.
 
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