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2020-06-08

ECB is following the Weimar Reichsbank into an inflation trap

The Institute of International Monetary Research says “broad” M3 money has been growing at a 19pc rate over the last three months (annualised) and will rise further

Prof Mayer is author of Europe’s Unfinished Currency and a fellow at the Centre for Financial Studies in Frankfurt.

While Weimar inflation stemmed from the upheavals of the First World War, Germany did succeed in stabilising the mark and controlling prices for a while. The rot set in when the Reichsbank stepped up money creation to cover falling tax revenues.

Inflation spiralled higher in early 1923 after French troops occupied the Ruhr to extract war reparations. Germans stayed at home under a policy of passive resistance, a form of lockdown. Printed money covered the shortfall.

Oxford professor Richard Werner said the euro has become a doomsday machine. “In the end it destabilises every country in one way or another. It will be Germany’s turn next,” he said.

Ambrose Evans-Pritchard Telegraph 7 June 2020 







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