This Matt O’Brien in The Atlantic:
“Everybody knows you can draw a straight line from its hyperinflation to Hitler, but, in this case, what everybody knows is wrong. The Nazis didn’t take power when prices were doubling every 4 days in 1923– they tried, and failed — but rather when prices were falling in 1933.”
Matt is of course right – unfortunately few European policy makers seem to have studied any economic and political history. Furthermore, few advocates of free market Capitalism today realise that the biggest threat to the capitalist system is not overly easy monetary policy. The biggest threat to free market Capitalism is overly tight monetary policy as it brings reactionary and populist forces – whether red or brown – to power.
Update: This is from the German magazine Spiegel:
“From 1922-1923, hyperinflation plagued Germany and helped fuel the eventual rise of Adolf Hitler.”
…I guess somebody in the German media needs a lesson in German history.
HT Petar Sisko.
PS Scott Sumner has a new blog post on how wrong many free market proponents are about monetary issues.
PPS take a look at this news story from the deflationary euro zone.