No, Dylan Grice Did Not Say Germany's Unwillingness To Print May Lead To The Rise Of Another Hitler

Tyler Durden's picture

A few weeks ago, SocGen's Dylan Grice released a piece which quickly became a scathing focal point in the inflation-deflation debate, in that he speculated that it was not the Weimar-unleashed hyperinflation (which incidentally is the primary reason why most Germany now dread what the outcome of a profligate ECB would look like) that led to the surge of the Nazi party, but in fact the opposite: the stinginess of German monetary authorities in the 1930s that further exacerbated the situation and helped unleash the Hitler juggernaut. Many promptly took sides in the argument, the bulk of which were shocked that Grice - traditionally a defender of prudent monetary and fiscal policy, would go so far as suggest that it is the ECB's duty to print or else it may justify another "Hitler"-type advent. Well it seems there was more than meets the eye, and in a follow up piece the strategist says: "The purpose of the historical analysis, therefore, was not to reach conclusions about how adherence to hard money principles will linearly lead to resurgent fascism, or war on a par with that seen in the 1930s. Neither was it in any way a defence of Keynesian fiscal activism. It was to illustrate that adherence to even the best principles must come at a price, making a judgment on whether or not that price is prohibitive or not is unavoidable, and today Germany and the ECB have to make that judgment." And his conclusion: "From the beginning of this crisis I've believed the only way politicians will get ahead of it is to bring in the ECB. Since I believe politicians do want to get ahead of it, I expect the ECB to print, and print copiously. I've repeatedly emphasized that printing will solve nothing, beyond buying market confidence for a while... All ECB printing will do is buy the politicians time and space to reset government and private sector balance sheets, to reform how their economies function and be honest with their own citizens. Whether they use that time or not is a separate question (frankly, I'm not hopeful)." But instead of us putting words in Grice's mouth, here is the explanation straight from the horse's mouth. Incidentally we agree 100% with Grice on the issue that eventual printing is inevitable. Which for the TLDR crowd means the entire Grice missive can be summarized as follows: 'buy gold.'

From Dylan Grice:

My point was that there is always a price. Today, the price of Germany and the ECB holding on to their hard money principles is a possible break-up of the single currency. But both have signalled that they won't pay that price ("if the euro fails, Europe fails"). So my conclusion was that since Germany's stance is logically inconsistent (it wants to hold onto its principles but it doesn't want to pay the price), it will ultimately be forced to choose. My prediction was that it   will sacrifice its principles. The three broad criticisms I got from readers were:

  • My history was factually wrong
  • My analysis was simplistic
  • In suddenly urging the ECB to print, I was a hypocrite

Let's go through each one in turn.

Complaint #1: Grice’s history is disgraceful and wrong

One common response to my thesis was that "fear of inflation" had nothing to do with Germany's decision not to devalue. In fact, the key factor was the  foreign debt Germany owed to the Allies. A number of you replied with this criticism, but the following was my favourite.

“Just read Dylan Grice's case that Reichsbank's hard currency policy helped the Nazis to power in 1933. I am amazed that SG would allow such Germanophobic historical crap to be published under its name. Unbeknownst to your strategist, the Allies set Germany's monetary policy back then. His paper is a disgrace.”


Irate Reader 1

Fanmail, eh?! To be fair to Irate Reader 1, foreign debt was an issue. According to Adam Tooze [See "Wages of Destruction: the Making and Breaking of the Nazi Economy" by Adam Tooze], then American President Herbert Hoover was leaning very heavily on Germany not to devalue because he was concerned about the value of American loans to Germany. But to say the Allies were setting German policy is quite an exaggeration. According to Tooze, the UK was very keen on Germany following its policy of devalution, while the French were offering them cheap refinancing credit. Keeping America onside was deemed by Germany - rightly or wrongly - to be in Germany's best interests.

Of course, the logic that said Germany couldn't devalue because devaluation would merely lead to an increase in the real debt burden is flawed, because the alternative policy of deflation also leads to an increase in the real debt burden (because the debt was denominated in gold). What Germany needed then, as various countries in the eurozone need today, was to default, plain and simple. So if Irate Reader 1 and those who made the same point are correct, the parallel with today is ironically even more acute. Then it was the US forcing an overindebted country into depression rather than allowing it to default; today

Germany is doing the same thing.

But as it happens, it's just not correct to claim that fear of inflation had nothing to do with Germany's decision to deflate rather than devalue. According to a speech given by then Reichbank president Hans Luther in September 1931:

“People point to the fact that inflationist countries receive a premium on exports as their costs have not adapted themselves to the depreciation of their currency. All that is true in itself: we have, indeed, experienced it ourselves. But have we not also experienced what follows? Have we quite forgotten that this advantage is only present in the first stage of inflation, and that as soon as costs and prices catch up the premium on exports vanishes … Then there would certainly be a demand to create a new “first stage” and so on. For this reason there is no question for us of a carefully controlled dose of inflation.”

At the same event, then-Chancellor Bruning said:

“Conditions in Germany, however, are very different from those in Britain. No people that has had to endure, as Germany has, the ghastly experience of such inflation, can tolerate a fresh blow, in times of the greatest uncertainty and fear, to confidence in the future of their savings.” [The Economist, Oct 3rd 1931, page 613 for both speeches]

If that's not fear of inflation driving a deflationary policy, I'm not sure what is. As for the charge that my observations were Germanophobic ? I think that implies that I'm blaming Germany for their depression, or even for what followed. But I wasn't (and I don't as it happens). I'm not interested in blaming anyone for what happened. Sometimes things just happen. I am just trying to understand why and how.

Complaint #2: Grice’s history is simplistic

Another common complaint was that I wasn't doing justice to an historical event with complex causes. One client wrote:

“Although a nice story it is more a fairy tale. Society/human nature/markets/economies are too complex to go back and say what would have happened. It’s futile anyway; you can’t do anything about the past but learn from it. And Dylan doesn’t.”


Dismissive reader

But I thought it was best summarized by a reader's comment on the write-up of my original piece on the FT's excellent Alphaville site:

“This is hideous historicism and statistical manipulation leading to grand and sweeping conclusions. This is the worst sort of shamanism!”

Shamanism?! I actually looked up shamanism in the dictionary and found it had something to do with the American-Indian religion. I think he meant charlatanism. Anyway, these readers were frustrated that my treatment did not do justice to a highly complex phenomenon. Why was I so sure unemployment was the decisive factor behind the Nazi rise, as suggested in the chart below?

If professional historians who have devoted their entire careers to the study of Hitler's rise to power cannot agree, how can a four-page investment strategy report? And anyway I wasn't attempting to provide the definitive answer. The fact is we don't know and we probably won't ever know, because we can't ever know what the single major cause was, or even if there was a single major cause. That's why I wrote.

“… how different might history have been if the Germans had inflated their economy when the crisis broke? It’s impossible to say.”

But what seems obvious to me is that the misery caused by yet another German economic crisis combined with uniquely German circumstances (e.g. the humiliation at Versailles, a 15 year decline in living standards, a calling into question of the liberal economic doctrine of boundless growth) drove demand for  a new belief system capable of explaining the world around them.

So I find it highly implausible to say that the depression - which I proxied with the unemployment rate - had nothing to do with that demand, and that it was merely coincidental to political radicalism. If we accept that the depression was one factor, it follows that anything weakening the intensity of that depression would have lowered the probability of the Nazis gaining power. And if we accept that an inflationary policy would have mitigated the intensity of the depression, the thought experiment and any logical conclusions derived from it seem perfectly valid to me.

Complaint #3: Grice is a hypocrite calling on the ECB to print

This was actually a slightly puzzling one for me, as I thought I'd made my position clear. But I couldn't have been because quite a few of you raised the same objection. As (another) irate client wrote:

“Your hypocrisy is astounding. After preaching about the evils of money printing, you now join in with the chorus, squealing for the ECB to ride to your rescue by bailing out your bankrupt employer!”


Irate Reader 2

Or another good one from the Alphaville readers' comments

“I find it quite entertaining how so many people who have been blustering and soap-boxing about the importance of hard money and criticizing money printing, quickly ‘go soft’ when their policies are actually in danger of being enacted. Grice being a case in point.”

This is not what I said. I argued only that Germany's principled stance exacerbated its depression and served the Hitlerite cause. If we all agree that serving the Hitlerite cause was a bad thing, then we presumably also agree that a willingness to compromise its principles would have been a better thing.

I found this not only interesting, but challenging too, because the corollary is that there is no such thing as an unbendable principle. This might be an uncomfortable observation, but that doesn't make it false. If a principle is unbendable it ceases to be a principle. It instead becomes a rule. And I agree with Doug Bader, the British WW2 fighter pilot, who said “rules are for the obedience of fools and the guidance of wise men.”

The purpose of the historical analysis, therefore, was not to reach conclusions about how adherence to hard money principles will linearly lead to resurgent fascism, or war on a par with that seen in the 1930s. Neither was it in any way a defence of Keynesian fiscal activism. It was to illustrate that adherence to even the best principles must come at a price, making a judgment on whether or not that price is prohibitive or not is unavoidable, and today Germany and the ECB have to make that judgment.

I categorically did not recommend that the ECB or Germany go down the printing path. What I actually wrote on page 4 was this.

“ … whether or not Germany wants to do that is its decision. To be clear, I’m not recommending any particular course of action and offer no comment on what I think they should do. I’m only trying to understand what I think will happen … it is entirely rational for them not to sanction an ECB funding of a bail-out … if they’re so fearful of the dangers of playing fast and loose with the credit system. I don’t blame them for that at all. Central banks’ over-willingness to play such games in recent decades has been instrumental in creating the overleveraged world we live in today.”

As a general principle, I don't make policy prescriptions. I don't believe my view on what should be done is particularly relevant to investors. The world is full of opinions about how the world should work, and how it should be run. Does it really need another one? I don't think it does, but to bend a principle (!) for the sake of clarity, here's what I think should happen. I think the ECB shouldn't get involved. I think it shouldn't sanction any ECB funding of the ESFS either. I think it should tell governments who made this mess that they can fix it. It should say, "If you want a central bank that prints money when things get tough go and launch your own currency using your own central bank and print until your hearts are content."

But then, I'm not emotionally attached to the euro, or Germany's popularity in Europe. And I think the ECB and Germany's politicians are. Nor is this a new idea on these pages. It is a position we've taken since the crisis broke. On 27 May 2010, after the very attempt to ring-fence the peripheral eurozone economies, I wrote a piece called "Print baby print" in which I said the following:

“Today, the ECB is buying insolvent eurozone government debt which it is promising to sterilise. Yet they face the same stark calculus faced by their Anglo-Saxon cousins in 2008. You can only worry about the economy's ‘price stability’ if the economy hasn't already melted down! So here's my prediction: they won't sterilize, and the [QE] program will expand.” [See "Print baby print -? emerging value and the quest to buy inflation" Popular Delusions, 27/05/2010]

From the beginning of this crisis I've believed the only way politicians will get ahead of it is to bring in the ECB. Since I believe politicians do want to get ahead of it, I expect the ECB to print, and print copiously.

I've repeatedly emphasized that printing will solve nothing, beyond buying market confidence for a while. Ultimately, I believe the eurozone's structural problem is its government-heavy, over-regulated, anti-entrepreneurial welfare model which I believe is broken. In client discussions I've drawn the parallel between today's uncompetitive eurozone, with the unrealistic social promises it has made to future generations, and Detroit. All ECB printing will do is buy the politicians time and space to reset government and private sector balance sheets, to reform how their economies function and be honest with their own citizens. Whether they use that time or not is a separate question (frankly, I'm not hopeful).

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Irish66's picture

OT.   BAC handed out notices wednesday had to be out friday

markmotive's picture

Perhaps USA's willingness to print will lead to the creation of its own monster.

US could see another debt crisis as early as Jan

He_Who Carried The Sun's picture

Very possible. Washingtoners have already created a monster-government and many civil rights have either been put on ice indefinetely or flat out abolished!

Actually this above piece about the crisis and Germany insults my intellect.

Evans-Pritchard has a less germanophobe take on this on The Telegraph:


TheSilverJournal's picture

It's pretty simple really: either the rate of printing continually increases, or fiat collapses and the bankers and policiticians lose the power of controlling of the printing press and take heat from the public for the pain of the collapse of fiat. Ummm....I think they print.

trav7777's picture

have any of these morons read Mein Kampf?  Hitler spells out in detail what his issues are.

The "problem" with Hitler was the war and his antipathy toward the desert nomad war tribe.  Weimar was a collapse, sure...probably would have led to war, but nobody "fears" war.  We seem to be itching for it.  The REAL boogeyman of "Hitler," and what he'll forever be associated with was the genocide during the war.  And, this was not caused by Weimar, it was caused by the fact that AFTER the collapse, Germany had been divested from German ownership and entirely into the hands of a select few of the desert nomad war tribe, who in many cases represented both sides in the Versailles negotiations and who had the levers of banking power.  They USED the hyperinflation to take ownership of the entire country.

As long as we are studious to prevent THAT, there will be no reason for another "Hitler" to rise.  Russia went through a collapse and there was no genocide, just a divestiture of state assets from war tribe members, many of whom were imprisoned or fled with their 2nd passports, and of course the MSM made it appear that something wrong was occurring that Russia was being returned to Russian hands.  Of course, they didn't make a PEEP when the international financier class destroyed the State in the first place and took onwership through confetti games.

whstlblwr's picture

Don't you have KKK meeting tonight?

Buck Johnson's picture

They are trying to shame the German govt. into giving up their money and putting their people into this unsustainable situation in order to protect the banking families of Europe and US.

CPL's picture

If you hadn't already noticed...that monster is already here.  Giant squid as I hear.

Snakeeyes's picture

But print they will. There is NO solution to Eurozone spending and debt crisis. Too many entitlements, too many riots.

Can Europe Control Its Spending And Save The Euro (or Gyro)? Don’t Look To China As A Role Model For Economic Growth Either

chubbar's picture

"All ECB printing will do is buy the politicians time and space to reset government and private sector balance sheets, to reform how their economies function and be honest with their own citizens."

Question : Through what mechanism does either the gov't OR the private sector balance sheets get "reset" with the ECB printing (or not)? I don't see any mechanism that does this other than direct default? Anyone know what the hell he's talking about?

I can possibly see some reform in the area of gov't spending (austerity) but if the printing flows only to the benefit of overleveraged banks, I don't see why the general populace would accept the pain? In other words, this sounds like bullshit. Anyone have another take on this paragraph?

Hedgetard55's picture

It's total and complete bullshit from a complete fucking moron.

trav7777's picture

the entire banking scam is a source of power for a very small group of people, frequently interrelated.  It needs to be eliminated or else we will see the weimar outcome on a global scale.  The financiers will protect and favor their cousins as they have done in every business deal they make.

It takes NO PARTICULAR brains to be a banker...the dominance of cousins in this industry is a result of nepotism, plain and simple.  Until and unless this cartel is broken up, the situation will continue to recur.

jm's picture

 Ambrose Evans-Pritchard made the same point three years ago.

It wasn't inflation that toppled Weimar.  Deflation destroyed the middle class.  Printing came too late after soceity was in ruins.  Enter Hitler and the jew-hating thugs.

whstlblwr's picture

This is a bankers mantra. All history I'm familiar with points to hyperinflation set ground for Hitler. You guys are idiots if you think we will keep watching idol with $6 gasoline and low house value. Watch OWS and teaparty unite.

We are definitely not in danger of deflationary spiral, and lower costs would help economy.

jm's picture

I'm not going to argue about history or inflation or deflation with you because history can be interpreted however you wish.  People now should be concerned about 16% unemployment and declining income in the US and utter collapse in the EU.  Commodities are a fart in the wind.  They rise and fall on a whim as people jump in and out of the hot potatoes.

I just think it hilarious that there are many that want to default on their debts and obligations yet think it reprehensible that central banks would take actions to allow default by small increments through monetization.

If you hate banks from the bottom of your primal id, fine.  Nobody really cares.  But despite these emotions and feelings, use your reason to accept the reality of the situation.  If you throw banks under the bus, everything gets dragged along with them.  Its not fair but its true.


whstlblwr's picture

He says, spoken from tower up high. What emotions and feeling are you referring to? idiot.

This is old argument and only someone who benefits from bailout and the corruption would make this argument you are making. The banks who lose millions, billions and play with trillions and put all the world at risk for their greed should fail. Throw greedy banks under bus and community banks who are strong, credit unions will benefit.

No one that I know wants to default on debt, and we watch central banks rob us, and the banks act with impunity while so far government officials just sit back nodding with crooked smirks on their faces.

jm's picture

No ivory tower for me.  I dislike many academics as they are too impractical, theoretical, and devoted to ideology.  Sadly, one doesn't have to be an academic to have these poor qualities.  I think there are more practical ways to deal with situations.

One, I think that we should all demand that those who broke the laws see jail-time and stop hiding behind the SEC and other corrupted regulators.  Also, forget fines as they are no deterent.  CEOs, CFOs, and entire boards should be in general population in state prisons.

Two, you may not know any that want to walk out on their obligations.  Perhaps you and yours are high-mindedor just blessed to have a job and security.  Good for you.  Many of the 16% underemployed and unemployed are not secure, and there are plenty of those people posting on zero hedge.  When you strip away the anger and bravdo, they want to walk because they can't pay their bills.  Ultimately many will have to without some way to mitigate.  Monetization is a way to ease the debt burden on these guys.  It is a tax on those who are secure of course, but better I think than the alternative of cascading defaults. 

whstlblwr's picture

I 100% disagree with you, monetization is not way to ease burden it causes inflation.

An example,
A man buys municipal bonds for high return from city in too much debt, but he doesn't care, he get's his money and higher interest rate, he buys knowing there is risk, but government will bail him out.

Or the man who looks over the situation sees the risk of too much debt and avoids the bubble. The city declares bankruptcy, the insurer can't pay for all costs, so the first man screams for bailout.

Why should prudent man suffer with inflation and pay for first man's risky bet?

jm's picture

The prudent man shouldn't suffer in a fair world.  But the world isn't fair. 

If it was just one man, small transaction amount going on I would totally concede your point.  The problem is that we are talking about nations, trillions of dollars of mortgage debt, etc.  In these cases, people that have nothing to do with the original transaction are impacted whether there is a bailout or a massive default.  This is the ancient problem of correlation... "evil happens to the wicked man as well as the good man".  I think the downside to allowing massive default is worse than the downside of trying to inflate our way out of the problem. 

Frankly, I doubt that it can be done anyway.  I hope this isn't the case, but the morons running Europe seem too absolutely stupid and paralyzed to act even as they repeat history's playbook.  They'll print like crazy only after the middle class of Europe is largely demolished and people will be so demoralized and out for blood that they accept a nutjobs like they are messiahs. 

zhandax's picture

I think the downside to allowing massive default is worse than the downside of trying to inflate our way out of the problem.

Problem is you can't inflate past the final doubling of the exponential function; particularly when you hit the final doubling of both debt and oil simultaneously.  Reach both of these at the same time and GDP can't be inflated enough to cover debt service and we are there.  All you are left with is a bit of choice in the trigger to the tipping point because simple mathematics dictates either default or jubilee.  So far, the deniers are choosing to kick the can until an inflection point is forced upon them.

ZeroPower's picture

Your posts above show youre a complete troll and i suggest you dont stress that brian power too much trying to converse with the other (informed) comments on this post.

trav7777's picture

You're aware that the primary bolsheviks were jews, right?  That the finance class in germany were jews, and that they USED the hyperinflation and their banking powers to acquire ownership of the ENTIRETY of Germany, right?

Even after YEARS of Hitler and anti-semetic ownership rules, they still had a third of the business assets of Germany.

How could such a situation NOT lead to trouble?

whstlblwr's picture

Bullshit. Go fucking talk to German Jew, asshole. Now you'll give us quote from some KKK site.

jm's picture

I think that things back then are as they are now.  Lots of broad overlay about what some Jews did onto all Jews and overlooking any non-jews that did exactly the same things. 

Most Jews were just like the rest of society...small-time farmers who didn't even know what a bolshevik was.  Also, nearly everyone in Poland and Russia can claim some Jewish heritage because contrary to popular belief, marriage outside of the religion was common.  So anybody can claim that the Revolutionary leadership was predominantly Jewish, but neglect to say they are counting people even 1/16 Jewish in their count.  I'll even grant that were a lot of Jews in Communist circles because they often had more university education.  However, Stalin may have been one of those 1/16 types, but identified hmself as Georgian and focussed the state apparatus on persecuting Jews in pogrom after pogrom.  So much for the Communists=Jews nonsense.

But facts didn't stop the Nazis back then and they don't stop people now.  In Germany, intermarriage was so common that Heinrich Himmler has Jews as relatives by marriage!  The SS had to lower their enlistment "standards" because they couldn't find enough "pure Aryan blood" untainted by Jewish intermarriage.  We all know about Hitler's possible Jewish ancestors.  In short, blaming Jews is always been easy and an enjoyable for people looking for a broad class of people to blame societal failings on. 

Now about owning 1/3 of business assets after the Hitler years.  You could be right, but you will need to prove it.  That statistic seems preposterous to me.


chump666's picture

gawd these horrible banks waiting for the equity/inflation trade.  i actually studied the weimar history.  suffice to say a 'bank' economist trying to justify a ECB print job and making up the Hitler will come if you don't print is beyond pitiful excuse for equity market inflation.

go back to school.  a hey sogen you butnuts i would be very very worried about the coming china meltdown...should decimate your asian trade, forget europe.

bania's picture

oh no he din't!

bob_dabolina's picture

Anyone ever wonder what happened to #ows? 

The organizers collecting the donated money said #occupyingBMWpeacebitchez

...and thus why socialism doesn't work

bob_dabolina's picture

I think ZH predicted this since they started.

I believe the axiom goes something like...

when faced with difficult decisions countries will print

Corn1945's picture

This is a poor quality article and lacks any real original thought or insights. This is typical of "analyists" that work for large financial institutions so I'm not surprised. 

topcallingtroll's picture

There may be printing, but only if governments give up budget supervision to a supranational organization.

The germans know that printing just buys time. Why print if there are no substantive budgetary changes in return? It falls apart eventually, print or no print, if no changes are made.

Germany is doing the right thing by holding out.

earleflorida's picture

fwiw dept: 

#1/2 ___ "Riksbank via Reichsbank"

#2/2 ___ 'Yesteryear's Economic Masters', and a tell-tale sign of extraordinaire ambiguity to the Nth degree by design - say it ain't so "Mr. Nobel"?[!]

Joebloinvestor's picture

What is the point of being a fiat if you can't print at will?

It all comes down to those willing to print outweighing those that don't want to print.

Imagine how wonderful it would be if they couldn't and had to deal with problems in a cost effective manner.

Yeah, that will happen (not).


High Plains Drifter's picture

hitler, holocaust, anti semitism..... blah, blah, blah, blah.............damn.............

slewie the pi-rat's picture

 <=== must.understand.weimar.

 <=== showing "relevant" predictions

choose one, but only if you must!


hooligan2009's picture

the question is,

"if it has always been possible to pay for welfare provision by printing money, then why haven't we always done it"

another would be:

"why does the exchange of one form of debt (government debt that is neear to default) by another form of debt (printing electronic entries at the central bank) make any difference to anyone.

if the answer to either is to print money then a third question pops up:

"why is it better to print money to save banks rather than printing money to increase pensions and healthcare?"

round and round it goes, where it stops no-one knows. i am thinking that "buy gold bitchez" is looking more attractive now.

sabra1's picture

just imagine, if all that printed money went to shelter, food, education, healthcare? elderly living alone would end, complete municipal help for anyone down on their luck! but alas, we all know where the money that was printed out of thin air went!

trav7777's picture

it'd just drive prices up.

We ALREADY spend an ASSLOAD of money on education and healthcare.  Our spending on education, for example, has EXPLODED in the last 30 years and there are NO RESULTS from it.  We already have a housing glut and food is ALREADY consumed in such quantities that a substantial portion of our nation is fucking OBESE.

You bleeding heart idiots are the problem.  You see maladies but have NO CLUE how to cure them.

hooligan2009's picture

interesting, trav supports bailing out failed banks rather than failed people, and would rather see people homeless when there are empty houses, better a bleeding heart (first time i have been called that!) than a bleeding brain i think.

Reptil's picture

YES !!!!!!!!!
bankers sabotaged Germany's economy after the first world war, and backed Hitler's coup.

As for IG Farben (Bayer, BASF, Hoechst) during and after the war (in your first link) also watch this presentation:
(sorry, german only, but well worth the effort)

CitizenPete's picture

All ECB printing will do is buy the politicians time and space to reset government and private sector balance sheets, to reform how their economies function and be honest with their own citizens. Whether they use that time or not is a separate question (frankly, I'm not hopeful)."


Two words:    TOO LATE

SwingForce's picture

Hitler. All you need to do is print the word and people get bent out of shape. I helped my son with a school report about The Volkswagen Company- you'd be amazed at its origins. 

Tuffmug's picture
ECB is ALREADY printing! Merkel's avowed opposition to printing is just obfuscation, a big lie designed to confuse the sheeple. 12/9 summit is a non event. ECB has already started QE Europe and is going to print big time. On Nov 18 they announced a "limit" to sovereign bond purchases of 27 BILLION per WEEK. That comes to over 1 TRILLION per YEAR created via the magic of electronic entries and expansion of the central bank balance sheet!!!!! ECB has already saved the Euro from collapse!
Draghi allowed PIIGS bonds to drop for a few days to scare the PIIGS and so it would not be obvious that ECB was doing QE but then came in strong to reverse the PIIGS bond decline.12/9 summit is just about treaty changes to fashion the debt manacles on the PIIGS to assure Draghi that PIIGS bonds he's buying won't crash because of continued drunken sailor defict spending.
chump666's picture

Correct.  Also, the SoGen and others are pissed that equities are caught in a trading range, i.e no major bullrun via printing presses.  Point is, if the ECB print so hard and go nuclear, Germany gets oil hyper/inflation + the living standards of the Germans collapse (from inflation like Weimar) then we will see German protestors go to SoGen banks (and others) and burn them to the ground.  Merkel knows this as does German ECB members, as does half the ECB former members that quit in the last few yrs.

Very briefly re: Weimar backlash, say economic from inflation/economic stagflation etc, actually had more to do with land owners that did very well from inflation.  That and Germany also had to pay massive abouts of payments to countries after WW1.  So anyone that owned something, businesses, houses, land and no debts actually didn't care about inflation - they became very wealthy.  Hence the scapegoats,  which lead to national socialism.  Also from a sociological perspective Germany backslashed against other aspects that they thought caused their suffering art, movies, cabaret, sex, etc etc etc

Watson's picture

There will be no German permission to print, at least in the absence of other arrangements (like huge tax increases, strictly enforced by German officials (which France will never allow, which is why it won't happen)).

Whatever the truth of the matter (and what is written above is not my understanding of the history) what the Germans _themselves believe_ is that inter-war financial indiscipline led to hyperinflation, which destroyed the savings of the middle class, and thus 'enabled' the rise of Hitler.

And they still feel very guilty about Hitler.

So there are no votes in Germany for anyone who even _appears_ soft on inflation, and Merkel knows this.

Merkel's party is losing elections, not winning them, despite the fact that she is extremely pro-Euro herself.

IMHO all that is going to happen is a lot of talking followed (at some point) by a big European bank or other institution failing.
Merkel will then say 'Well, we offered to help save the Euro, on proper disciplined terms, but you didn't agree', and then (genuinely regretfully) re-introduce the DEM to minimise the effect on Germany of the ensuing chaos.

Tuffmug's picture

Merkel isn't giving "permission" but she is ignoring fact that ECB already is "printing"! Just one more fraud in a system built on fraud!

trav7777's picture

they're conditioned to feel guilty about Hitler even though THEY WEREN'T THERE.

Just as white people are conditioned to feel guilt over slavery when none of us alive owned any slaves!  I've seen pictures of white women on their knees begging the forgiveness of black men.  WTF?  Were these men slaves?  Were these women slave owners?  Even if BOTH were true, did THESE women own THESE black men?  If none of these is answered yes, then NOBODY owes ANYONE ANY apology!

Do jews feel guilt over their role in CREATING Weimar?  In the establishment of a communist dictatorship in Russia which ended up committing a SUBSTANTIALLY worse genocide (against Ukraine)?  Do blacks feel guilt over crimes committed by OTHER blacks?

NO.  They laugh at it.  "I didn't do it.  Don't tar us all with a broad brush, guilt by association!!"

Let the people who ARE to blame BE blamed.  Don't tell me fucking "white people" owned slaves and I am white THEREFORE, I share somehow in this guilt.  I don't.  Even if my dad owned slaves, I am NOT resonsible to pay his sins.  Nevermind people who I only SUPERFICIALLY RESEMBLE.

Certainly, the people who RAIL when I make general statements unflattering to blacks will be here to junk me because I REFUSE to submit to a SPECIFIC assignment of guilt to ME as a result of a GENERAL statement about whites!

Bam_Man's picture

Of course the policy was to adhere to a "hard money" doctrine in early 1930's Germany. Yes, this had awful consequences, but politically there was actually no other choice. The country had just gone through a devastating hyper-inflation less than a decade earlier. Any move in the direction of devaluation would have set off a rapid panic and flight of capital for fear that recent history was about to repeat itself.

Only today would it be considered "appropriate" to pursue an inflationary monetary policy directly in the aftermath of a hyperinflationary episode. Serial default via inflation as "policy" is widely accepted today (a major reason why the Gold price is where it is), but in the 1930's would not have been tolerated.