If Germany was on its knees economically in the early 1930s, then how did it manage to fuel such rapid economic growth in a short period of time to a point where it could almost take over all of Europe?
Hi, you might find this section of our FAQ useful, particularly this answer by /u/caherdaniel and others
This is quite interesting story with a lot of still controversial historic correlating data. The most truthful and accurate description of the cause of the rapid economic growth relates to US banking crisis of 1931, and its rebound.
The collapse
(1930-1931) US President H. Hoover called for moratorium on payment of war reparation, allowing Germany to skip on payments to France, and Britain, and in turn started pouring emergency funding from private banks, wealthy persona's, and corporation investments from US *(and some from England). Its original aim was to slow down the process of Germany economic, and monetary collapse (- which came anyway - but Germany wasn't allowed to default).
The economic rebound and 2nd collapse averted by War.
Once Hitler took powers of Chancellor of Germany in 1933, Reichstag passed the Enabling Act enabling them to deviate from many things, including international monetary agreements. The rebound in Germany economy was reflected to that of improving situation in US markets, after 1933 Banking Act - marking the rebound from depression word-wide.
Thanks to Enabling Act Germany was able to introduce Mefo bills in 1934 marking the real boom in Germany economy. Mefo bills were used for internal trading, concealing actual state of internal economy from international watchers at the time. The rearmament costs exceeded 101 billion, causing huge deficit, and national debt. The US emergency funding program stopped in 1937, and noting US banks were also main creditor to German banks.
German government forced their banks were to buy Mefo bonds - and pushing Germany into another collapse which was slowed down by very controversial movements like confiscation of property, and valuables from German Jewish population, Anschluss (Austria annexation), annexation of western Czechoslovakia, and then war with Poland which resulted in WW2. The war in turn stopped the 2nd collapse of its Banks until the end of WW2.