The principle argument of the book is that the level of reparations required from Germany were unprecedented in scope and unconscionably high. The sums exacted from Germany were higher than the entire pre-war output of Germany. Given the devastation to the German economy wrought by the war effort, he felt there was no way for Germany to ever repay. In addition, the treaty removed from Germany the only feasible ways for it to repay any war reparations. The entire German merchant marine was confiscated. As was her entire holdings of foreign securities. In other words, we took away all of Germany's external wealth. And we took away her only means of getting more wealth (exports). Then saying
You owe us more. The only other source for Germany to repay would be in internal wealth, denominated in worthless German marks. Germany's only hope to repay would be to exact taxes on her population so high that everything above subsistence income would go to reparations. Which leaves little incentive for people to work hard.
In reality, the reparations had to be renegotiated several times during the 1920s because Germany was unable to repay. And they were sitll high enough to breed the resentment in Germany that led the National Socialist Party to power. Which was something Keynes warned about in the book, though he did not (and could not have) predicted the form of political unrest that ultimately did happen.
1. Treaty of Versailles (1919). 2. Economic History—1918-1945. 3. World War, 1914-1918—Economic aspects. I. Title