Mark Schieritz, the financial correspondent of Die Zeit in Frankfurt, recently wrote an article called the “Lie of Inflation” (to accompany his new book) that argues Germany needs to step back from its instinctive reaction against any policy that is seen as inflationary.
The fear of inflation is rooted in German history. Hyperinflation during the Weimar Republic caused Chancellor Heinrich Brüning to initiate an “iron austerity politics”, with a rise in taxes, cut in state expenditure and wage and credit controls. This was designed to help the economy in the long run, but in reality the fear of inflation was replaced by economic crisis.
* Read the entire blog post here.