Photo: Wikimedia Commons
The overwhelming German view of economics basically goes like this: The primary evil in the world is inflation, and the central bank must do everything to right it.We’ve never heard of a German economist at the Bundesbank or the ECB say otherwise.
That popular fear of inflation is frequently ascribed to the German experience with Weimar hyperinflation, which in popular mythology lead to the rise of the Nazis, and the darkest spot in German history.
But of course this isn’t the real story of the economics that lead to the Nazis, and it seems that not every German economist remembers things this way.
There’s A German economist who remembers that the pre-war economic crisis that bought the Nazis to rise was not the hyperinflation of Weimar Germany, but rather the austerity pursued by Chancellor Brüning.
Die Welt profiles economist Peter Bofinger, who is the only economist among Germany’s elites that is forcefully coming out against austerity.
The economist Peter Bofinger has compared the current austerity policies of the euro countries with the devastating crisis policy of the Weimar Republic.
“The policy, which is currently operating in Spain, Portugal and Greece, is the policy of the Chancellor Brüning,” Bofinger said the “Weser-Kurier”. Whose Cabinet had intensified in 1931 and 1932 with massive cuts in social spending, unemployment and hyperinflation enormous.
Such savings makes no sense for countries that were in a recession, said Bofinger. “The situation in Greece is partly due to the economic shock therapy.”
It’s hard not to sympathize with this argument, in light of the literal rise of Neo-Nazis in Greece, which has been crushed the hardest by austerity.
Ray Dalio has also made similar points recently in regards to deleveraging and the rise of someone Hitler-like.
So anyway, we’re glad that not all German economists see history and the current economy the same way.
Meanwhile, there’s buzz from German papers (again) about a possible softening of terms for Greece, so that is something to watch in the days ahead.