German economists and the German government are adamant in demanding fiscal austerity in the crisis countries, the most extreme case being Greece. But they should know better: There are uncanny parallels between today’s Greek depression and Weimar Germany’s in the late 1920s / early 1930s: Both economies were trapped in the straitjacket of a fixed exchange rate regime – the gold standard then and the euro now; both economies had huge foreign debts – the Germans mostly with the US, the Greeks with Germany and France. Both economies faced tremendous pressure from international financial markets. And both governments made matters worse by relying on severe austerity.
Posted on: Wed, 21 Jan 2015 07:54:34 +0000
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