During that period he promoted the concept of the social market economy (soziale Marktwirtschaft), on which Germany's economic policy in the 21st century continues to be based.

[2] His father Wilhelm Erhard (born 1859) was a Catholic Church clothing store proprietor, while his mother Augusta adhered to Protestantism.

[4] Ludwig suffered from infantile paralysis in his third year, resulting in a deformed right foot and forcing him to wear orthopedic shoes for the remainder of his life.

[5] In the following years, he was a commercial apprentice at the Georg Eisenbach textile company in Nuremberg until 1916 [5] and worked thereafter as a retail salesman in his father's draper's shop.

[6] Due to his injury he could no longer work as a draper so Erhard started learning economics in late 1919 at a business college in Nuremberg.

During his time at school, he developed a friendship with the economist and professor Wilhelm Rieger, to whom Erhard owed much of his convictions of economic liberalism.

Ohlendorf himself spoke out for "active and courageous entrepreneurship (aktives und wagemutiges Unternehmertum)", which was intended to replace bureaucratic state planning of the economy after the war.

Under the Bizone established by the American and British administration in 1947, he led the Sonderstelle Geld und Kredit ("Special Office for Money and Credit"), an expert commission preparing the currency reform in Germany's western zones of occupation.

The commission began its deliberations in October 1947, and the following April produced the so-called Homburg plan, elements of which were adopted by the Allies in the currency reform that set the stage for the recovery of the economy.

While Erhard had designed this policy to assure currency stability and stimulate the economy via consumption, business feared the scarcity of investment capital would retard economic recovery.

Erhard's financial and economic policies soon proved widely popular as the German economy made a miracle recovery to rapid growth and widespread prosperity in the 1950s, overcoming wartime destruction and successfully integrating millions of refugees from the east.

However, Erhard suffered a series of decisive defeats in his effort to create a free, competitive economy in 1957; he had to compromise on such key issues as the anti-cartel legislation.

The fact that he was not a member was known only to a very small circle of party leaders, and it did not become known to the public until 2007, when the silence was finally broken by Erhard's close advisor Horst Wünsche.

Despite Washington's reluctance, Erhard envisaged offering Nikita Khrushchev, the leader in Moscow, massive economic aid in exchange for more political liberty in East Germany and eventually for reunification.

[20] The acting American Secretary of State George Wildman Ball described Erhard's plan to essentially buy East Germany from the Soviet Union as "half-baked and unrealistic.

The Soviet leader secretly encouraged Erhard to present a realistic proposal for a modus vivendi and officially accepted the Chancellor's invitation to visit Bonn.

Erhard's policy complicated Allied initiatives toward German unification, a dilemma that the United States placed on the back burner as it focused on Southeast Asia.

Faced with a dangerous budget deficit in the 1966–1967 recession, Erhard fell from office in part because of concessions that he made during a visit to U.S. President Lyndon B. Johnson.

Erhard continued his political work by remaining a member of the West German parliament until his death in Bonn from heart failure on 5 May 1977.