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The Weimar Republic, established after Germany's WWI loss and crippling reparations, faced economic devastation, with hyperinflation and mass unemployment. Foreigners exploited the cheap prices, leading desperate Germans to the sex industry, particularly in Berlin, where prostitution flourished in a legal gray area. All types of prostitutes were available, including child prostitutes, with advertisements in newspapers. Homosexual, lesbian, and transsexual bars were common, and violent sexual acts occurred. Pornography also thrived.
Fashion blurred gender lines, and drug use was rampant. Magnus Hirschfeld, a homosexual Jew, founded the Institute of Sexual Research, which developed gender categories and performed sex reassignment surgeries. Art, music, and film became sexualized and anti-authoritarian. Jewish individuals were prominent in politics, the press, the arts, and the sex industry, leading to perceptions of Jewish overrepresentation. The Nazis shut down homosexual bars, pillaged Hirschfeld's institute, and burned books deemed degenerate.