Thursday, July 9, 2015

Hitler, Inflation, and Deflation

Paul Krugman points to « one of the infuriating misunderstandings of German economic history », i.e. the idea that hyperinflation was what brought Hitler to power.

He rightly notes that: “Yes, there was a hyperinflation in 1923, which may have helped radicalize German politics. But the proximate factor in Hitler’s rise to power was the great deflation of the 1930s, brought on by a disastrous attempt to stay on gold.”  (The Conscience of a Liberal, July 8, 2015, “Deflation and You-know-who”).

This is an unpalatable truth for those who defend the euro on the ground that it protects all of us against the horrors of inflation … at a time when many European economies are on the verge of … deflation, brought on by the disastrous attempt on the part of non German members of the Eurozone to stay on the euro, Greece being actually on an effective deflationary trend!

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