Economic history: Germany’s hyperinflation-phobia | The Economist

Stamp of the German Empire during the inflatio...

Stamp of the German Empire during the inflation postal value: 1000 marks (Photo credit: Wikipedia)

1 Million Mark notes, used as note paper, Octo...

1 Million Mark notes, used as note paper, October 1923 (Photo credit: Wikipedia)

Deutsch: Inflationsgeld von 1923

Deutsch: Inflationsgeld von 1923 (Photo credit: Wikipedia)

This is an excellent blog from the Economist. Check it out!

via Economic history: Germany’s hyperinflation-phobia | The Economist.

This article explains Germany’s fear of inflation in very easy terms. The concept is not new. Scholars call it ordoliberalism. This is the German version of neoliberalism superimposed with fears about inflation.

Of course, this is only half the story. The second half is about the German government not telling the German people the truth, and helping German business to benefit at the expense of the rest of Europe. See Wren-Lewis for an expansion of this argument or or Krugman on the Fall of France.

Yesterday, Eurostat announced that Euro area annual inflation was down to 0.3% in August. It added that Euro area flash inflation for Services was 1.2% – other goods 0.3%, with Food at -0.3% and Energy at -2.0%.

If we add the impact of sanctions on Russia and Russia’s sanctions on Europe, the trend is into deep recession.

So how should the World convince Angela Merkel‘s government to urgently support reflation across the Euro area? In my mind, we need to look to the fear of inflation and convince German people that that the fear of deflation is much more serious than inflation. It is time for the mainstream media and the social media to convince German people that their deepest fear is really about deflation not inflation! Certainly, Paul Krugman is now focused on what he describes as “Germany’s sin” but that’s another blog…






Future Scenarios For The Eurozone – Social Europe Journal

English: map of Europe; blue: Eurozone, green:...

English: map of Europe; blue: Eurozone, green: monetary agreement with the Union, purple: Euro as currency (outside of Eurozone), orange: ERM II, lightgreen: currency pegged to Euro, red: members of Union outside of Eurozone or ERM II; language: Hungarian Magyar: A jelmagyarázat megtalálható a képen (Photo credit: Wikipedia)

This is an excellent short article by Björn Hacker, published  in the Social Europe Journal.

via Future Scenarios For The Eurozone – Social Europe Journal.

(A) Muddling through the Crisis. The Eurozone remains a house without a protecting roof.

(B) Break-up of the Eurozone. The Euro house falls apart.

(C) Core Europe: evolution of two-level integration with a smaller and stable, but exclusionary Euro house.

(D) Completion of the Monetary Union by a fiscal and political union. The roof is repaired and construction completed.

For the moment, it seems that (A) is prevailing. If push comes to shove, I could envision (C). I struggle with both (B) and (D).

At the moment, all eyes are on France but I predict that the focus will shift, once again, to Germany, with pressures to reflate. See my earlier reblog of Paul Krugman’s astonishing data on France.




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