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Commentary: That's Right, Blame the Germans

Honestly, I do sympathize with anybody who blames us Germans for anything (we are, after all, the traditional villains of many a plot - at least in Hollywood).

I even sympathize with Mr. Soros when he so popularly blames the Germans for - allegedly - pushing Europe into a deflationary spiral with their staunch austerity plans. I sympathize. I even understand. But I equally firmly disagree. Maybe because I am German.

Let me explain.

If there is one lesson we should have learnt from the Great Depression - or so many of our friends in the Anglo-American banking world keep telling us - then it is that we must avoid DEFLATION.

If there is any lesson the Germans should have learnt from two lost wars and the Great Depression, then it is that they must avoid INFLATION.

Come on! You Germans are just inflation-fixated and paranoid, you say? - Well ... maybe. But maybe we have reason to be.

"You have to remember one thing. In the last century, the Germans completely lost their nominal wealth no less than three times", Otmar Issing, well-known former chief economist of the ECB and the Bundesbank points out. "That simply gives us a different psyche to many other nations."

How true! And we all know (or should know by now) that even the economy, business, the markets, politics are far more about psychology than about facts.

What Germans Fear Most

So save your collective breaths in pointing out that the danger of inflation is no longer founded, that over half a century of stability-obsession and life with two stable currencies - the euro is, statistically speaking actually more stable than the old deutschmark ever was - should have cured us of our Angst ....

Save your breaths. Because it is still there. The Angst. No German out there in the streets fears deflation, but many of them still fear inflation. Across the ages and social status.

A recent study about "what the Germans feared most" in their personal lives the fear of "inflation and losing your hard-saved euros" was almost always among the top five, often even in the number two spot, topped only by "fear of losing health". And the young people voiced these fears as much as the older ones.

So there it is. Live with it, Mr. Soros. Whether you blame us Germans or not, we are who we are, inflation angst and all. And, let's face it, given our economic and stability record, I would at least say the jury is very much still out on precisely who's pursuing the best path out of the crisis here.

One thing is for sure, easy money and overspending (by whomever) have driven us to the edge of the abyss we have been staring at for a few years now. And to me at least, the idea of "let's just grow ourselves out of the crisis by driving up public debt and worry about how to cut deficits later" somehow doesn't seem all that brilliant.

But then, hey, I am just another German and inflation-paranoia might be in my genes. Sorry…

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