Germanyâs âhard moneyâ principles and opposition to Quantitative Easing by the ECB are, more often than not, framed with reference to the hyperinflation in the Weimar Republic.
Indeed, itâs a widely accepted truth that the horrors of the Third Reich were caused by the three year period of hyperinflation between June 1921 and July 1924.
But not in the way many people think, reckons Dylan Grice. The SocGen strategist believes the reaction to the policies of Reichsbank president Rudolf E. A. Havenstein played a more important part in Hitlerâs rise to power. And this has implications for those attempting to understand the Eurozone crisis and Germanyâs response.
But while Hitler’âs first attempted power grab occurred in Bavaria at the peak of the hyperinflation,– the November 1923 âBeerhall Putschâ – by the late 1920s the Nazis were little more than one of the larger fringe groups whose best days were judged to be behind it.
But as the world economy collapsed in the early 1930s the gold standard broke up. Successive countries chose to devalue their currencies and inflate their way out of painful deleveraging (chart below). Germany was the exception. Haunted by von Havenstein’s ghost, it fatefully chose to bear instead the brunt of gold standard deflation, experiencing a depression arguably greater even than America’âs. It was then that something broke in Germanyâ’s collective psyche. With resurgent Nazi support, Hitler won power in 1933, his rise facilitated not only by the 1923 inflation, but by the subsequent fear of inflation.
http://ftalphaville.ft.com/blog/201...s-of-sticking-to-uber-harte-wahrung-strategy/
Although SocGen´s Dylan Grice is a quacksalver IMO, he is delivering somthing useful with his observations of the Weimarer Gold standard mistakes...
Indeed, itâs a widely accepted truth that the horrors of the Third Reich were caused by the three year period of hyperinflation between June 1921 and July 1924.
But not in the way many people think, reckons Dylan Grice. The SocGen strategist believes the reaction to the policies of Reichsbank president Rudolf E. A. Havenstein played a more important part in Hitlerâs rise to power. And this has implications for those attempting to understand the Eurozone crisis and Germanyâs response.
But while Hitler’âs first attempted power grab occurred in Bavaria at the peak of the hyperinflation,– the November 1923 âBeerhall Putschâ – by the late 1920s the Nazis were little more than one of the larger fringe groups whose best days were judged to be behind it.
But as the world economy collapsed in the early 1930s the gold standard broke up. Successive countries chose to devalue their currencies and inflate their way out of painful deleveraging (chart below). Germany was the exception. Haunted by von Havenstein’s ghost, it fatefully chose to bear instead the brunt of gold standard deflation, experiencing a depression arguably greater even than America’âs. It was then that something broke in Germanyâ’s collective psyche. With resurgent Nazi support, Hitler won power in 1933, his rise facilitated not only by the 1923 inflation, but by the subsequent fear of inflation.
http://ftalphaville.ft.com/blog/201...s-of-sticking-to-uber-harte-wahrung-strategy/
Although SocGen´s Dylan Grice is a quacksalver IMO, he is delivering somthing useful with his observations of the Weimarer Gold standard mistakes...
