I previously discussed the debt-binge party that got the eurozone into the mess it is currently in. Now, I’d like to focus the discussion on the key country that I believe will decide how this grand plan called the eurozone will be determined: Germany.
In the early 1920s, Germany experienced what can only be described as the perfect hyperinflation storm. It ravaged the country, leading to hunger, suicides and destitution of unimaginable proportions. The scars of that hyperinflation still resonate with the German people today.
But the scars run deeper and influence policy today in the eurozone because it was from this hyperinflation depression that the destitute people desperately searched for answers with which to alter their lives. The answer came in the form of Adolph Hitler.
After the debt party that I previously discussed, Germany was determined not to join in the call for money printing because its central bank—the Bundesbank—has erected symbols of the Weimar hyperinflation in its halls. It was money printing that led to the hyperinflation, which then led to Hitler gaining political power. So, Germany said “never again.”
Although the rest of the world and the rest of the eurozone claim that Germany is overreacting, I’d argue that if our culture was responsible for not only hyperinflation, but also Hitler, we’d be just as hesitant to follow policies that led to the disastrous events of the 1920s.
After the financial crisis hit in 2008, Germany resisted the calls to print money and was able to have France by its side, which went along with the German ideology of austerity. Germany deemed austerity measures to be … Read More