Monday, June 11, 2012

Austerity, Anger, Depression and the Lessons of the 1930s

Martin Wolf:
It is often forgotten, not least in Germany, that the rise of Adolf Hitler to power was preceded not by the great inflation, which occurred a decade before, but by the great depression and the austerity of Heinrich BrĂ¼ning, in response. Thus, votes for the Nazi party jumped from a relatively insignificant 810,000 in 1928, to 6.4m in 1930, and 13.7m in July 1932. Deep economic collapses are dangerous.
Read the entire essay, a response to a senior official in Germany's finance ministry.

Nouriel Roubini and Niall Ferguson:
Fixated on the non-threat of inflation, today’s Germans appear to attach more importance to 1923 (the year of hyperinflation) than to 1933 (the year democracy died). 
They would do well to remember how a European banking crisis two years before 1933 contributed directly to the breakdown of democracy not just in their own country but right across the European continent.
Read more.