The European Basis For New Monetary Science

by Jeffrey P. Snider
Alhambra Partners

Looking back it almost sounds like a completely different world. In the end, however, the world hasn’t changed, perceptions have. On May 10, 2012, German newspaper Spiegel reported that Bundesbank’s (Germany’s central bank) chief of its economics department, Jens Ulbricht, testified in the German parliament that German inflation was likely to be, “somewhat above the average within in the European monetary union.” What happened after it seems amazing in retrospect.

The Financial Times declared the statement as a regime change for Bubba, saying that, “The willingness to contemplate higher domestic inflation in public comments points to a new-found flexibility in German thinking.” Just two days later, Germany’s largest newspaper Bild ran on its front page a story under the title Inflation Alarm that featured no less than an accompanying picture of Weimar Germany’s 1-billion mark note. Germans may still be more afraid of a return of hyperinflation than Nazis.

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