The actual context is that they believed they would win the war if they continued fighting. They believed that peace deal was "stab in the back" of great fighters by soft politicians (and jews). To large extend, WWII was redo because by and large Germans did not accepted defeat.

Btw, that is literally why WWII ended up without peace deal, with complete military takeover of Germany. The alliance wanted to avoid another "we were about to win" myth followed by third round of the whole thing. They wanted clear military victory, so that no one can possibly think they would win it if it continued.

Second, the conditions were softer then what Germany planned against their enemies in case they win. The bigger economic disaster in Germany pushing toward far right was great depression. You can discuss how much economic consequences of the loss contributed to the culture, but the fact is, Germany was pretty violent country and celebrated war itself.

We can get into the weeds about German (or more accurately, Prussian) militarism. Prussia dominated the day-to-day politics of the united German Empire (for good reason, it essentially led the unification), but didn't necessarily represent the rest of the country. Even today, German culture varies a lot by region.

I remember reading about the post-war reconstruction of Germany, where a handful of anti-nazi German politicians (in particular Ludwig Erhard) tried to rationalize how the German people, that gave the world Beethoven and Bach, fell to the evils of Nazism. The oversimplified answer could just be it depended on who was in control. There are evil people everywhere.

It still is one - but more quietly.