I know that Germany took many decades to pay back its WWI debt, and only recently completed paying it off. However, this claim surprises me, especially in light of how terrible hyperinflation was in Germany during the Depression. Does Judt mean that Germany was strong economically until the Depression? Or is Judt's claim non consensus among historians?
(Source of the quotation is the Introduction to Judt's book Postwar)
In 1920 Germany was on its knees from the effects of the blockade and war industries. Britain and France had massive debts. Versailels imposed reparations on Germany, similar in effect to debt repayments but which added massive levels of resentment on the part of German militarists and nationalists. The spreading popularity of the 'stab in the back' theory saw the militarists retain much of their authority and standing. This was further exacerbated by the French military occupation of the Ruhr Valley.
The early-mid 1920s could be considered a period of chaos resulting from this. All the European nations were financially weak, but Germany had the additional problems.
In the late 1920s Weimar Germany sought an appeasing foreign policy, and took loans from the USA. This was largely a hedge against British and French interests trying to restrict Germany's economic expansion, as they tried to defend their own markets. US financial risk would result in US sympathy for German development.
Unfortunately, this policy was pursued right up into the early 1930s, meaning the German government was seeking to unite its people behind 'Versailles-friendly' policies while taking out large loans for capital development. The stock market collapses thus very heavily impacted Germany, while also discrediting the policy of openness and playing into the hands of fascists and nationalists.
After Hitler took power (and before), these policies were roundly rejected: Germany abandoned the gold standard, repudiated debts to the US, and stopped paying reparations. Soon, the German government was printing money by the 'mefo' system and instituting tight controls on the movement of capital.
These events really eclipsed the importance of war reparations per se. It's probably fair to say that once Germany overcame hyperinflation and the worst direct impacts of World War I and the following revolutionary period, all the European nations were equally exhausted and financially bereft.
A good book on the subject is Adam Tooze's The Wages of Destruction.
Clarification - when he says Germany emerged better off is he talking about right after that Armistice, circa 1920? Or is he speaking in general terms and saying that the Germany of the 1930's and 1940's ended up being, in relative terms, stronger economically than its adversaries than the Germany of 1914?
The latter seems to make more sense because an immediately post-armistice, 1919/1920 Germany hasn't had a chance to pay any war reparations, so why would those be relevant to bring up?