How Did Hitler Fund a Huge Military When Germany Was Broke?

Germany 1923. Hyperinflation has destroyed the currency. A loaf of bread costs 200 billion marks. Families burn money in their stoves because it’s cheaper than firewood. Then 1929, the Great Depression hits. Banks collapse. Factories close. By 1933, 6 million Germans are unemployed. 30% of the workforce. Families are starving in the streets. This is the Germany Adolf Hitler inherits when he takes power in January 1933. A nation economically destroyed twice. But just 6 years later, 1939, everything has changed. Germany invades Poland with 3 million soldiers, 3,000 tanks, 4,000 aircraft, the most modern military in Europe.

In 6 years, this bankrupt nation built the most powerful war machine in the world. How? The answer involves a fake company, a financial wizard, and a national scale Ponzi scheme. The MEO Bills, a shadow banking system that funded Nazi rearmament while hiding it from the world. By 1939, the bills were coming due, and Germany didn’t have the money to pay them.

So Germany had no choice but to invade its neighbors to avoid economic collapse. The Nazi economy wasn’t just built on ideology. It was built on a financial scam that required constant expansion to survive. This is how Hitler paid for World War II and why economic collapse made war inevitable. Before we dive in, imagine this.

It’s January 1939. You’re Germany’s top economist. You know the economy is about to collapse. You know Hitler’s only solution is war. Do you speak up and risk your life or stay silent and let it happen? Real people faced this exact choice. By the end of this video, you’ll understand why every option was bad.

If you’re into history that makes you think, hit subscribe. Let’s start with the crisis that made this all possible. To understand how desperate Germany was, you need to see both catastrophes. First, the hyperinflation of 1923. November 1923, the peak of VHimar hyperinflation. A single US dollar is worth 4 trillion marks.

Workers demanded to be paid twice a day at lunch and at the end of their shift because by evening their morning wages were worthless. Restaurants changed their prices while customers were still eating. Waiters had to climb on tables every half hour to call out new menu prices. Life insurance policies that families had paid into for decades matured into sums that couldn’t buy a single postage stamp.

This wasn’t an economic crisis. This was economic apocalypse. The German middle class. savings, pensions, investments wiped out overnight. Germany slowly recovered. The currency stabilized. Life began to normalize. Then 1929, the Great Depression. American banks call in their loans. German businesses collapse. Unemployment explodes.

By 1932, 6 million Germans are unemployed. 30% of the workforce. Families are auctioning their furniture on the street to buy food. Engineers and teachers are begging for work as laborers. The VHimar government is paralyzed. Political violence is constant. Communist and Nazi street battles are turning cities into war zones.

Germany had been economically destroyed twice in 14 years. This is the environment that brings Hitler to power. In January 1933, Hitler promises to restore German greatness, to rebuild the military, to defy Versailles. But Germany is bankrupt. The Versailles Treaty limits Germany to 100,000 soldiers, no tanks, no aircraft, no submarines, no heavy artillery, and Germany has no money to build them anyway.

Hitler needs to rearm massively, secretly, without anyone noticing until it’s too late. and he needs to do it with an economy that’s been destroyed twice. Enter Yalmar Shakt, the man who would make it possible. Yalmar Horus Greley Shack, born 1877, banker, economist, financial genius. He’d already saved Germany once. In 1923, as currency commissioner, Shacked ended the hyperinflation by creating a new currency backed by land. It worked.

The rent mark stabilized. Shakt became a legend. March 17th, 1933, Hitler appoints him president of the Reichkes Bank, Germany’s central bank. August 1934, Shakt becomes minister of economics. Shak’s job, fund massive rearmament without anyone noticing, without triggering inflation, without revealing the scale of what Germany is doing.

Shak is brilliant and he has a plan. Here’s Hitler’s challenge. Germany needs to build tanks, planes, ships, weapons. That means paying steel companies, arms manufacturers, chemical plants. But if the Reichkes Bank just prints money to pay them, two things happen. First, inflation explodes again. Germans won’t tolerate that. They lived through 1923.

Second, the payments show up on official Reichkes Bank statements. Foreign governments will see them. They’ll know Germany is rearming. They’ll intervene before Germany is ready. Hitler needs invisible money. Money that doesn’t trigger inflation. Money that doesn’t appear on official records. Shakt creates it.

In 1934, Shakt creates a company. Metalluga gazels. MBH, Metallological Research Company, Limited Liability, MEO for short. On paper, it’s a research consortium. Four major German companies Zemens Kup Rinmetal and Gutah Hofnong Hutter own shares in MEO which has a nominal capitalization of only 1 million Reichkes marks total. In reality, MEO does nothing.

It’s a shell, a fake company with letterhead and a bank account. But MEO is about to fund the largest rearmament program in history. Here’s how the scheme worked. Imagine you’re a German arms manufacturer in 1935. The government orders a thousand tanks from you, but instead of paying you in Reich’s marks, they pay you in MEO bills.

These bills are IUS, promisory notes issued by MEO, the fake company. They’re basically checks that say MEO promises to pay you this amount in 5 years. Now, you don’t want to wait 5 years. You need cash now to pay your workers and buy steel. So you take these MEO bills to a private German bank. The bank looks at the bills.

They know MEIO is backed by the Reichs Bank. They know the Reichs Bank will honor these bills. So the bank gives you cash. Real Reichs marks. Maybe at a small discount, but cash. You’re happy you got paid. Here’s where the magic happens. The private bank now holds MEO bills. They take them to the Reichkes Bank. The Reichkes Bank converts them to cash using its money issuing powers.

But here’s the critical part. These transactions never show up on the official Reichkes Bank balance sheet. MEO bills are private obligations. They’re not government debt. They’re not Reichkes Bank debt. Officially, they’re debts of a private research company. So when foreign governments look at Germany’s finances, they don’t see this massive rearmament spending. It’s invisible.

Between 1934 and 1938, Germany issued 12 billion Reichs marks in MEO bills. For context, Germany’s entire national debt in 1932 was about 10 billion Reichs marks. Germany secretly added more than its total debt in hidden obligations to fund rearmament, and nobody outside Germany knew the full scale until it was too late.

By 1936, Germany had violated every military restriction of the Versailles Treaty. They had tanks, aircraft, submarines, a modern army. The Allies didn’t intervene because they didn’t realize how far it had gone. But there’s a catch. Those MEO bills, they come due in 5 years. The first bills were issued in 1934.

They mature in 1939. and Germany doesn’t have 12 billion Reichs marks to pay them back. The clock is ticking and that’s when the Ponzi scheme comparison becomes accurate. A Ponzi scheme works like this. You promise investors high returns. You pay early investors with money from new investors.

It works as long as new money keeps coming in, but eventually you run out of new investors. The scheme collapses. Everyone loses. Nazi Germany’s economy worked the same way. MEO bills were promises to pay later. Germany planned to use future economic growth to pay them off. But by 1938, Germany’s economy couldn’t generate enough revenue to pay the bills.

The scheme needed new money. Where do you get 12 billion Reichs marks when your economy can’t produce it? You take it from someone else. March 1938, Germany annexes Austria, the Anelless. Austria has gold reserves, foreign currency, industrial assets. Germany seizes all of it. September 1938, the Munich Agreement.

Germany takes the Sudatan land from Czechoslovakia. March 1939, Germany occupies the rest of Czechoslovakia. Czechoslovakia has gold reserves. The Skoda Arms Works, one of the most advanced weapons factories in Europe. Germany seizes all of it. September 1939, Germany invades Poland. Poland has agricultural production, natural resources, millions of people who can be forced into labor.

Germany seizes all of it. The Nazi economy wasn’t just immoral. It was structurally designed to require conquest. As one historian put it, they had to invade a couple of countries for it, though. Yalmar Shak saw this coming. By 1937, he’s warning Hitler that the economy is overheating, that the spending is unsustainable, that they’re heading for collapse.

Hitler ignores him. On January 7th, 1939, just weeks before the first MEO bills come due, Shack submits a desperate report from the Reichkes Bank directors. The report urges drastic curtailment of rearmament spending, reduction of expenditures, a balanced budget as the only method of preventing inflation. Hitler’s response January 20th, 1939.

Hitler fires Shack as Reich’s bank president. Shacked had built the machine, but he’d also built in a time bomb. And Hitler’s solution was to keep the bomb from exploding by constantly feeding it. feed it with Austria, with Czechoslovakia, with Poland, eventually with France, the Soviet Union, everywhere. The war wasn’t just Hitler’s ideology, it was economic necessity.

By 1939, Germany had two choices: economic collapse or expansion. Hitler chose expansion. But MEO bills weren’t the only revenue stream. The Nazi economy had other sources. And they were even darker. When Germany conquered a country, they didn’t just take military control. They systematically looted it. Gold reserves, foreign currency, art, industrial equipment, raw materials.

In France, Germany imposed occupation costs. France had to pay Germany 400 million Franks per day to occupy France. That’s France paying for its own occupation. In the Soviet Union, Germany planned to extract grain, oil, minerals to feed the German war machine. The entire economic model was parasitic. Then there’s slave labor.

Concentration camp prisoners were used as forced labor in German factories, building weapons, manufacturing parts, mining coal. Companies like IG Farbin, Seamans, Croo used slave labor from camps. Prisoners were worked to death. When they died, they were replaced. The Nazi economy wasn’t just funded by theft. It was built on slavery.

This isn’t just immoral. This is the economic structure of genocide. Here’s another scam that shows how deep the theft went. The Volkswagen, the people’s car. Germans were told they could own a car if they saved up through the Deutsche Arbites front. Pay a little each month. eventually get your Volkswagen. 275 million Reich marks were collected from German savers.

How many civilian Volkswagens were delivered during the entire Third Reich? Zero. The factory was converted to military production, the Kubalvagen, a military vehicle instead of the promised people’s car. German savers lost everything. They didn’t get compensation until the 1960s. The Nazi economy didn’t just steal from conquered enemies.

It stole from its own people. Here’s another scheme. In the 1920s and early 1930s, Germany borrowed huge sums from Britain, France, and the United States. The loans were supposedly to help Germany pay Versailles reparations. Germany took the money. Then Hitler stopped paying reparations in 1933, but he kept the loan money. So Germany used money borrowed from Britain and France to build the army that would invade Britain and France.

When Germany invaded France in 1940, the new Vichi government forgave part of the debt. Germany got free money from its future enemies and of course the confiscation of Jewish property. Jewish businesses, bank accounts, homes, art, everything seized by the state, sold, used to fund the regime. This wasn’t just persecution.

It was systematic theft used to finance the government. Every aspect of Nazi economics was built on taking from others. So by 1939, the Nazi economy was running on meo bills, plunder, slave labor, and theft. And none of it was sustainable. By 1939, the Nazi economy was on the edge of collapse. MEO bills were coming due. Germany couldn’t pay them without plundering more countries.

The economy was overheated. Inflation was creeping back. Shortages were appearing. Shacked had warned this would happen. He was proven right. But instead of pulling back, Germany accelerated because pulling back meant economic collapse, unemployment, political crisis, the end of the Nazi regime. Hitler’s only option was forward.

This is the part most people don’t understand about Nazi Germany. The war wasn’t just ideology. It was economic necessity. The Nazi economy was designed to require expansion. Without conquest, it collapsed. Historian Adam Tus wrote a book about this. The wages of destruction, the making and breaking of the Nazi economy. his thesis.

Nazi Germany was living on borrowed time from day one. The economic model required constant warfare to survive. When Germany invaded the Soviet Union in 1941, it wasn’t just about Laban’s realm or racial ideology. It was about oil from the Caucuses, grain from Ukraine, resources to keep the economy from imploding. The war was the economy.

The economy was the war. And when Germany started losing territory in 1943 and 44, the economic model unraveled. No more plunder, no more resources, just endless expenditure. The Nazi economy was a pyramid scheme. And like all pyramid schemes, it eventually collapsed. So let me bring this all together. How did Hitler pay for World War II? He didn’t.

Let me explain. The Nazi economy was built on four pillars. First, creative accounting. Meo bills allowed Germany to hide 12 billion Reich marks in debt off the books to rearm in secret to build a war machine while the world thought Germany was still recovering. Yalmar Shack’s genius was creating invisible money, but that money was still debt.

And debt comes due. Second, plunder. Germany funded the war by stealing from everyone they conquered. Austria’s gold, Czechoslovakia’s weapons factories, France’s occupation payments, Soviet grain, Polish labor. The Nazi economy was parasitic. It required constant new hosts to survive. Third, slavery. Concentration camp prisoners, prisoners of war, forced laborers from occupied countries, worked to death in German factories, building the weapons used to conquer more countries to create more slaves.

The economic model was inseparable from genocide. Fourth, theft, Jewish property, Versailles loan defaults, canceled reparations, even stealing from German savers through the Volkswagen scam. Every aspect of Nazi economics involved taking from others without compensation. So, was Nazi Germany a Ponzi scheme? Essentially, yes.

Early investors got paid with money from later investors, but the later investors were countries and payment was conquest. Meo bills came due in 1939. Germany didn’t have the money, so they invaded Poland. The loot from Poland funded operations in France. The loot from France funded the invasion of the Soviet Union.

As long as Germany kept winning, kept taking, the scheme worked. But the moment Germany stopped expanding, the whole structure collapsed. This is why the war was inevitable. By 1939, Hitler had two options. Expand or collapse. The Nazi economy wasn’t built for peace. It was built for war. And that’s how Hitler paid for World War II.

With promises he couldn’t keep, with money he didn’t have, with resources he stole. With labor he enslaved, the Nazi war machine wasn’t funded by economic strength. It was funded by a scam that required constant conquest to avoid collapse. And when the conquest stopped, the economy died with the regime. Here’s my question for you.

Knowing that the Nazi economy required constant expansion to survive, do you think the war was inevitable? Or could Germany have pulled back and transitioned to a sustainable economy? Drop your thoughts in the comments. If this changed how you understand Nazi Germany’s economy, hit that like button and subscribe for more history that connects economics, politics, and war.

Thanks for watching.