Yet, you can't entirely blame Germany for being slow to act. First, Germany has it comparably good right now and increasing inflation could change that. Germans also have an intense fear of inflation, which the article explains in detail. Germans remember or have been raised to fear the hyperinflation of the 1920s, which wiped out savings and devastated the economy. Because of that financial strength, security, and saving have been key, which has been good for Germany in the last couple of decades, but bad for the countries in trouble now. So, the question is, will Germany be able to get over its fear of inflation in time to act to help Greece and the others?
Saturday, December 3, 2011
Haunted by Hyperinflation
At lot of people are looking to Germany, as a leader in the Eurozone, to get out of this European Debt Crisis. Recently, Germany has been criticized for being slow to act on account of its fears of inflation.
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While it makes sense that Germany would be hesitant to support a plan that would cause inflation, not doing so could cause the crisis in the euro zone to get worse. As the article points out, there is currently little to no growth so even if some inflation were to occur it would not be anything like the hyperinflation in the 1920's. I think that in order to stabilize the crisis, the European Central Bank should buy the bonds of the indebted nations, but Germany is of a different opinion. It will be interesting to see whether or not that changes.
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