I've seen people say it wasn't as bad as most people think, but I'm not really sure why. The indemnities demanded forced the Germans to print money to pay them off, and this led to hyperinflation, or so I've read. They also deprived Germany of many key manufacturing sites in the Rhineland, which could have been used to pay the indemnities.
Can someone help me understand this?
Even with the Rhineland Germany was still looking at reparations which included a 25% tariff on all exported goods, which would have made it all but impossible for Germany to get anyone to buy German.
Speaking in terms of economics the volume of debt wasn't as important as the fact that Germany wasn't in a position to dictate how it got paid off. States, unlike people, don't exactly go bankrupt, but a combination of instability, economic weakness and a staggering debt (remember- Germany didn't pay for the war by raising taxes, they took out loans and took themselves off the gold standard) all came together to severely debase the country. An unstable country has all the loonies come out of the wood works and suddenly political parties and philosophies that were previously considered entirely off the mark and out there gain political steam. Comparatively, the US racked up some massive debts over WW2, yet the economy boomed after the war, largely thanks to how the US government elected to pay off those debts. And a lot of it had to do with the fact that paying down the debt was met with a lot of government programs. The government practically rolled over and begged young adults, who had money to burn and a consumer appetite that'd been locked up behind war time economy rationing for years, to buy houses on the cheap and start families.
Germany had no such luck. They had no control over how their debt was to be paid out. Depending on who you ask and how you look at it, the hyperinflation was done on purpose either to intentionally give France the middle finger over the treaty, or to basically force the inevitable as soon as possible. Someone probably figured the sooner Germany hit "rock bottom" the sooner they'd be able to make concessions and demands and start a meaningful economic recovery.
Versailles was designed to punish Germany- severely. The problem was that depending on how you look at it, it either didn't go far enough, or went too far focusing on the wrong things. This is in stark contrast to after WW2 where Germany was occupied- heavily- and more specifically the state was controlled by foreign powers and basically neutered. Germany didn't have a traditional army they had any real control over, the wider military culture was broken- or at least what was left over after WW2- and everything was de-Nazi'fied. Though I doubt most anyone really missed it at that point.
The indemnities didn't force the Germans to print money to pay them, that was both a German attempt to reduce the reparations in real terms and the impact of the German government's decision to pay wages of striking workers in the Ruhr after the French and Belgian occupation in 1923.
In addition to /u/takemyplow 's answer, it may be useful to compare the reparations imposed on France at the end of the Franco-Prussian War, and the reparations imposed on Germany at the end of WW1.
Keep in mind that it is important to compare the two wars. The Franco-Prussian war had a short open conflict, lasting only just over 9 months. Whereas WW1 lasted 4 times as long. Bismarck strongly opposed many parts of the Treaty of Versailles which negotiated the end of the Franco-Prussian War, in particular the ceding of Alsace-Lorraine to the German Empire, and the size of the indemnity. Indeed, it exceeded Germany's cost of that war and was viewed as a forced tribute.