[jmherbener]

Holding money (in Keynes-speak “saving”) means a reduction in demand for goods (in Keynes-speak is a leakage from the total spending) and therefore, results in price deflation. But paying back debt simply transfers money from the debtor to the creditor. For money demand to be reduced it must be the case that the creditors hold more of the money transferred than the debtors. This seems unlikely, especially if the debtors are banks since banks can pyramid more money substitutes on top of any cash paid back to them in loans or, at least, issue the same amount of the loans in money substitutes if they are paid back in money substitutes. So I don’t see what distinguishes “debt deflation” from deflation. Also, I don’t see what importance can be attached to the distinction between foreign and domestic debt in cases of hyperinflation. Hyperinflation is caused by increases in the money stock large enough to set in motion a collapse of money demand, which results in the vanishing of money’s purchasing power.

Here’s a more reasonable assessment of the German hyperinflation:

http://mises.org/library/90-years-ago-end-german-hyperinflation

Here’s more on hyperinflations in the 20th century:

http://www.econlib.org/library/Enc/Hyperinflation.html

http://www.cato.org/publications/commentary/hyperinflation-mugabe-versus-milosevic

https://www.dallasfed.org/assets/documents/institute/annual/2011/annual11b.pdf