In the broader context, it's precisely because of hyper inflation that Germany was able to rearm- MEFO bills fit squarely into Germany's interwar period economic strategy- and largely was able to do so without anyone really knowing what was up. There is still debate over whether or not Germany was doing this deliberately but the net result was the same: Germany couldn't repay it's war debts and it does recount a fairly old lesson about state based economic policies. If I owe the bank money, that's my problem, if Germany owes France money, that's France's problem. While it is true that inflation is to the benefit of the debtor rather than who they owe that money to, it's also true that Germany had been devastated by the first World War, was having an existential crisis in the wake of it's outcome, and was getting bent over a barrel by the Great Depression just like everyone else.

They were able to develop very advanced military equipment such as tanks and planes.

This is one of those myths I have to dispel every time it comes up. The most cutting edge piece of German technology was actually the humble Jerry Can. It's the one to the right. In an environment where the Allies were concocting elaborate, labor intensive designs for transporting liquids- water, gasoline, you name it- that were unintuitive to use, complicated to ship and prone to logistical issues- what happens when your fuel container that requires a screw-on pour spout loses it's pour spout?- the Germans came up with a design that could carry anything, easily allowed for two people to carry it at the same time, was made almost entirely from stamped metal parts which made scaled production easy, was sturdy and resisted leakage in transit, and required no special tools or additional parts to operate.

Meanwhile the British were using a container that the British Army lovingly referred to as, "The Flimsy." They were prone to leakage, especially in storage, and were prone to losing as much as half their content in action and apparently the British liked using them as improvised stoves.

Germany also enjoyed some novel advantages in niche areas as well- German naval mines were a nightmare for the British until they figured out how to deal with them, German submarines were great for about a year and change when they were targeting largely unprotected sea lanes and going after ships that were held together with rivets instead of welded hulls- but as the wider narrative goes, Germany's fancy toys were restricted to niche roles, fundamentally failed to change the country's strategic situation and typically only required a change in tactics to combat.

Of course in practical terms, the actual kartoffelpüree and hähnchenschnitzel of the German armed forces at no point in WW2 held a competitive technological advantage over their enemies, unless you consider Germany thumping smaller local neighbors- Poland, specifically- in a joint invasion with the Soviet Union a feat. This isn't to say the equipment of the German armed forces were poor quality- that distinction goes to Italy- but instead that they were adequate. The Gewehr 98 was a good bolt action rifle in an environment where everyone had more or less figured them out. The MP40 was a competent submachine gun design that understood the implicit problem with the Thompson (that it was expensive to produce) but Germany didn't deploy these effectively, largely leaving them to infantry squad leaders, vehicle crews and special forces like the fallschirmjäger. The MG34 revolutionized the machine gun and while the MG42 was very inexpensive to produce, and simple to operate, it wasn't really anything special. By the time Germany invades France, their tanks are completely outmatched by French tanks in every conceivable way except that German armored units often had more radios distributed among them, and better logistical elements which enabled them to effectively project into the French countryside far more effectively. Of course, France could have had all that but the reason they didn't was actually owed to political reasons- De Gaulle and the political interference that kept French armored forces stuck with WW1 equipment is a story unto itself- instead of a lack of means or technology. Bottom line, France willfully committed to equipment and strategic level thinking that specifically hamstrung operational flexibility which, as the Germans demonstrated, was dramatically more important than building the finest, most state of the art tank from 15 years prior.

And that's roughly how things play out over the course of the war. Germany had competent designs- the Panzer 3 and 4- and had some incompetent designs- the Tiger 1 and 2- and it was typically the 'cutting edge' technology that was incredibly wasteful. Germany may have introduced a full production jet engine fighter first, but it was only a matter of months before the British had achieved the same feat. The only reason the US didn't have one was because they were unimpressed with the performance of theirs- and indeed the fact that the ME262 was vulnerable at take off and landing was routinely exploited by enemy air combatants. Germans developed IR technology for crude night vision equipment, but they were years late to that party; everyone else simply hadn't bothered because it wasn't the tactical advantage the Germans thought it was. Funny thing about IR technology, it let the Germans see at night and it let everyone else see a giant glowing red eye where the presumably German guy holding the German gun was.

And then, of course, people always want to talk about German's rocket scientists. And to be entirely fair those rockets look awful impressive, but the V-1 rocket failed to change the strategic situation Germany was in, and the V-2 rocket struggled to hit city sized objects with any precision. The V rocket program, in total, was more expensive than the Manhattan Project, and the Manhattan project gave the Americans atomic bombs. The V-rocket program, meanwhile, was actually more adept at killing laborers working on the program than it was of the people they were intended to kill.

How did they transform from a financially distressed nation to one that seemed to be economically dominant enough to wage war on many nations at once?

Timing was everything. Most of the Allies were simply not in a position to sufficiently, directly resist the Nazis at the onset of WW2. They'd actually respected the terms of Versailles, large portions of their active armies were still aged WW1 era equipment and in an operational sense many of them were still hamstrung- one of the defining moments of WW2 was most likely when Stalin ordered the purge of his military officers.

While it is true that a gaggle of skilled soldiers and some quality equipment- the RAF, the Hawker Hurricane and the Supermarine Spitfire may have saved the UK during the Blitz- can save the day, the actual means to which the US and the Commonwealth were able to sustain a front across mainland Europe in 1944 was owed to years of planning and manufacturing. It wasn't just the guns, the tanks, the bullets, the soldiers, and so on that were why Germany was so adept for a good 2, maybe 3 years of the war, it was the simple fact that someone understood that this robust manufacturing was what sustained an army in the modern era. It wasn't exactly sexy but what made the US armed forces so effective was actually things like the Jeep and trucks. Germany was pretty close in that respect but they were still stuck relying heavily on horses.