However, where the Allies went wrong was not enforcing the disarmament side of the treaty. They continued to allow the Germans to build bigger and bigger ships in violation of the treaty and to build an air force, which was also forbidden. Then they allowed the Germans to begin reoccupying the Rhine and other areas.
They had it backwards. They should have forgiven the monetary part of it and enforced the more important disarmament parts of the treaty.
The U.S. did a great thing after WW2. They were kind to Germany and Japan after the war and they ended up not only emulating our way of life but became the second and third largest economies in the world in the process.