How accurate is it to say that following 1945 the economy of the FRG was successful?

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  • Was the FRG economy continually successful from 1945-1989?
    • Initial success in the late 40s
      • Mostly focused on ec. recovery
        • Marshall Aid, Abolishing price controls, new currency, Nazi infrastructure
          • 20th June 1948 --> Deutschmark
          • Relaxation on rationing
          • Debts up to RM400billion wiped out
            • But savers had a low exchange rate (RM100 to DM6.5)
          • Banks given loans
        • 2 million unemployed
        • Inflation rising!
      • 1947: 33% of 1938 industrial output
    • Economic Challenges (1966-73)
      • Mid 60s
        • Recession and slow growth
          • Grand Coalition is formed
            • Erhard
              • 10% spending cuts
              • extra working hour
                • no effect, global demands are too high
                  • 10% spending cuts
            • Breaks down in Nov. 1966, due to Erhard resignation and disagreement over dealing with the recession
          • Risk of inflation (prices rise by 4% in 1966)
          • Prices rise more than productivity
      • 1966
        • Erhard
          • extra working hour
            • no effect, global demands are too high
        • Late 60s
          • CDU/CSU: SPD Coalition
            • FIRST EVER ECONOMIC PLAN
              • Dec. 1967 --> Five Year Financial Plan
              • Stabilisation Law (co-operation)
              • Article 109 of B. Law is ammended to give gov. control over state taxes and policies
              • Consequences
                • 6% industrial growth per annum
                • 1969: Inflation down to 1.5%
            • Collapses in 1969 revaluation
        • 70s
          • SPD:FDP Coalition
          • Willy Brandt
            • Brings in social reforms
          • 1973 OIL CRISIS
            • Raise prices of oil due to high demand and hostility with the West (prices up 70%, output down by 5%)
            • Consequence
              • 1973: $692 million deficit from a surplus in 1972
              • Unemployment up to 4.6% from 1.2%
      • 80s
        • Resilience of the economy
          • Advertising and government action ups exports :)
          • Government
            • Invest in Nuclear Energy
            • European Monetary System (ties EEC to Germany)
            • Private sector investments (DM7-8bill)
            • Abolished legislative measures to merging firms
        • KOHL
          • SOCIAL MARKET ECONOMY
            • Growth was at an avg. 3.6%
            • Unemploy. at 7.6%
          • Public ag Untitled ainst privitisation so they had faith in the FRG
          • Budget increases capped at 3%
        • 1986: Inflation is less than 1%
        • Exports rise to DM134billion in 1989
        • Provided 25% of the budget for the EEC (was the driver
      • Economic Miracle of the 50s, and maintainance into the 60s
        • 1949-55: Salaries rise by 80%
        • 25% growth (due to longer hours of work and ...)
          • 1949-55: Salaries rise by 80%
        • Social Market economy
          • Businesses set their own wages and prices
            • Government only intervenes if people are vulnerable with SOCIAL WELFARE
          • Evidence of success
            • Productions quadrupled in 10 years (48-58)
            • 10 year stats for Unemployed: 11% -- 1.3%
            • 10 year stats for: Savings: 3.2% - 9%
        • Maintaining the Miracle
          • Government
            • Work creation schemes
            • Anti-trust Law dismantles cartels
            • Banking controls (no hyperinflation)
            • Rebuilding programmes
          • Other factors
            • Growing world economy
            • No defence spending
            • Korean War = demand for economy
            • Marshall Aid  ---> 1.5 billion
        • Evidence
          • 60s = full employment and no unrest
          • S.O.L = ^
          • Trade deficit of DM3.6 billion is now a profit!
        • Consequence: 3rd largest economy (trade deficit of DM3.6 billion is now a profit) 60s

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