Honestly? I have no idea why the nazis didn't do this.
I would be slightly upset at this has been covered in this very story. But that was many, many years ago so I shouldn't have unrealistic expectations.
So why not build a less resource intensive fleet designed to do what the nazis actually wanted their navy to do anyway (make life hell for any actual naval powers they were fighting, with as few resources as possible).
And you can't use the 'concern about other countries' excuse because this is nazi Germany, and not only do they not care, but very few neighbours can or would have done anything to stop them anyway.
The starting point would be that until late 1937 Hitler was still planning on Britain being an ally, or at least a 'friendly' neutral, so that overshadowed pretty much all Nazi naval thinking. So if you are not fighting the Royal Navy what is it the Nazis wanted their fleet to do? Keep the French out of the Baltic mostly and frankly no-one really expected the French Navy to even try something so ambitious so there was no real mission for the fleet. As has been mentioned the Panzerschiff were almost entirely political ships and for many years the Reichsmarine then Kreigsmarine had no idea what to do with them because they were overkill for keeping out a French Navy that didn't really want to go into the Baltic in the first place.
Then we come to the Anglo-German Naval Agreement, another part of the big 'Keep Britain on side effort' that Hitler was pursuing and something Britain wanted because the Admiralty were not stupid and wanted Germany tied into a 'normal' but small fleet they could beat not a 'freak fleet' optimised for breaking blockades and annoying the RN. This pretty much forced the Nazis into a standard ship builds, as was the entire point of the treaty, and so you see the
Admiral Hippers which were notionally Treaty Standard 10kT 8" heavy cruisers. The Nazis lied utterly about the tonnage but spent years pretending they were complying, because Britain was the neighbour that did care and would do something if the naval balance of power was threatened.
Of course the Nazis can go off and build a Jeune École type fleet of subs, torpedo boats, AMCs and surface raiding cruisers but that fleet would have only one possible aim - fighting Britain. So it requires not only the British to not react adversely (even if only diplomatically and economically) but for Hitler's entire grand strategy and war planning to radically change and do so much, much earlier than OTL for no obvious reason.
Or, just don't bother with a navy at all and spend all your effort on other things (which is bascially what they did, bar some weird ego projects and the U boat program).
Two battleships, two battlecruisers, five heavy cruisers and a carrier were all laid down by the Nazis along with a pile of destroyers, that's on top of the ships Weimar had built. A lot of resources were spent on it and it caused shortages elsewhere particularly in specialist materials, tools and kit, so it was a lot more than nothing.
Now if the argument is that the Nazis should have
actually built nothing then I can see the advantages. But of course it comes at a cost, the most immediately obvious one is no Norway campaign, plus the more complex term question of how Britain reacts when there is no German naval threat.
Even if somehow nothing changes and the route to war is unchanged you can easily see a situation in say early 1942 where the RN is able to freely send arctic convoys around a friendly Norway and Italy has been booted out of North Africa as the RN concentrated their forces and got mores supplies to 8th Army while cutting Italian lines. With ever more LL aircraft and tanks pouring into the Soviet Union (after all none are needed in Allied controlled N. Africa) and it just being a matter of time till the second front opens up, maybe 1943, maybe late 1942 if the US get their way, many Nazis would be wishing they had had a fleet that could have influenced all that.