Reading about the constant defaults, bank collapses, political unrest, and reconstruction required, it looks like it was doomed to failure from the beginning. France and the UK also seem to have been at least somewhat reasonable later on, allowing Germany to default many times and only reluctantly occupying portions of Germany to force compliance. There does not appear to be a malicious intent to destroy Germany, just to humiliate and humble.
I'm sorry but I'm taking issue with your premise that the Treaty of Versailles lead to the economic collapse of post-war Germany. I'm especially taking issue with /u/AusNeet's analysis that it was "110% correct" that the "severe financial burdens" were responsible for Germany being incapable of maintaining economic stability or growth between 1918 and 1923. The post war hyper-inflation was a bifurcated situation with a primary cause and a secondary one; the economic sanctions of the Treaty of Versailles were the secondary one. Peri-war economic decisions by the German government were the primary cause.
Let's start with the as I call primary cause. Germany had planned for a short war and had the economic policies of a short war, one of massive and rapid borrowing that could not be sustained. While France's credit expanded 242% from 17,289 million francs to 41,937 Germany's would rise 379% from 4,508 million marks to 17,126. Germany would, in fact, have more war loans drives than the Entente Powers combined. She would have a total of 9 while the UK would have 3 and France would have 2, for instance.
Germany's prime financial issue in 1918 and it's prime virtue in 1914 was its achievement of liquidity. Liquidity is the economic principle of being able to sell goods at their intended value. As in, not having so much overproduction and a lack of purchasing that you don't have to reduce prices to just get rid of "stuff". They predicted that mobilization would generate a shortage of cash but also leave industry with a shortage of workers and rendering the plant idle, not good. So they flushed their economy full of money to stimulate it. Price controls were good enough in 1914 but as war orders and employment rose Germany needed to throttle back, it was overproducing and overspending. It could have applied harsher taxation or increased interest rates which would have reduced production to a reasonable level and cut back on liquidity issues. They did neither.
Systematic failure of the German government to rethink financial policy for a prolonged war and for long-term employment rather than short term war employment lead to the Darlehenskassen. It would offer an interest rate of up to 6.5% on bonds (as opposed to the Reichbank's 5%) and only required deposits to be fixed for 3-6 months as opposed to years. For the sake of saving you the time of boring financial speak, it was a colossal failure of its intended purpose. In fact the total issue if Darlehenskassenscheine was 15,626 million marks -- ten times the original authorization of 1,500 million. Further instead of relieving liquidity issues of business, it actually pushed business away further. The local governments, who held about 1/4th of the bonds prior to this point rose up to holding an astonishingly 75% while business investments went down.^[1]
The people were completely impoverished. The final war bond drive would acquire 40% less "subscribers" (citizen donators) than needed. The German people just did not have the money to throw it away at war bonds when they could barely find a loaf of bread to feed their family. In response to this the German government would begin just flat out printing money to pay for the war hoping that in a victory they would seize so much economic potential from conquered territories that it wouldn't matter. Obviously they lost and the exact opposite happened -- they were the ones partitioned. This leads me to final point: By the armistice Germany was spending 90% of its ordinary budget on interest payments acquired through war debt. The German government had effectively sabotaged their own economy from pure incompetence.
Now we get to the issue of the Treaty of Versailles. More specifically we get to the issue of war reparations which are so commonly attributed to the rise of hyperinflation as some independent actor which removes all human agency. As we know already though it was self inflicted economic policies which contributed the most to the post-war economic conditions. What happened next was not incompetence but deliberate sabotage however. Rudolf Havenstein, president of the Reichbank from 1908 to 1923, would deliberately and intentionally conspire with other critical members of the German government to sabotage their own currency. The belief, as you can read more in depth in Sally Marks' The Myths of Reparations, was that by destroying their economy and basically sending inflation intentionally into overdrive they would force the Entente powers to reconsider and even remove reparations and sanctions. It was also an act of post-war aggression. They had lost the military war but wanted to win the economic one. By basically screwing the French out of their reparation payments needed to rebuild their country and industry the Germans would (theoretically) destroy the French economy in tandem by restricting their rebuilding process.
Considering the Germans weren't even pretending to act in good faith the French occupied the Ruhr in 1923. Combined with the death of Havenstein, who was the mastermind of this conspiracy, that same year the German government seriously began reconsidering its position. Hjalmar Schacht would be put in charge of the Central Bank and between 1924 and the Great Depression, 1929, the Weimar Republic would actually experience noticeable economic growth and stabilization. In this time the reparation payments would be forgiven in large amounts leading up to 1932 when nearly all reparation payments were forgiven by the former Entente powers, over 90% not having to be paid.
So when Germany actually tried to fix her economy and work in sane, economically safe ways it experienced growth even with reparations. It experienced a crash in the Great Depression like everyone else unfortunately and it got hit the hardest of anyone because they were still, ultimately, a rebuilding economy. However we know from those 5 years of economic growth that Germany was on the track to economic prosperity despite the treaty and, even in the end, the Entente powers were quite reasonable in forgiving war debts once Germany began acting in good faith.
^[1] Bogart, Ernest Ludlow, War Costs and their Financing pp. 116-117, Strachan, Hew, The First World War: Volume I: To Arms pp. 908-911
Marks, Sally, Central European History, Cambridge University Press, Vol. 11, No. 3, pp. 231-255
Strachan, Hew, The First World War: Volume I: To Arms, Oxford University Press
Yes. Many prominent economists, among them economic advisor to the British delegation at the Versailles Peace Conference John Maynard Keynes in his Economic Consequences of the Peace (1919) pointed out the horrific economic burden that various clauses of the Treaty of Versailles would impose on Germany. Keynes examined the post-war economic foundations of Germany and determined that it was simply impossible for Germany to maintain economic normality in the face of the severe financial burdens. As the record shows he was 110% correct.