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October 16, 2019



"In this light, isn’t it plausible that German’s hostility to inflation should be based not so much upon current evidence as upon memories of the 20s?"

By any standard Germany since WWII has been a well managed economy. Opinions are made without really understanding how it works. For example according to neo-classical theory collective bargaining shouldn't work. Perhaps they have got the inflation-unemployment balance right (assuming they think there is a trade off - which I suspect they don't). Workers in Germany compared to the UK enjoy good living standards. There is no need to inflate. As for the southern periphery in the EU this requires a careful allocation of capital rather than another monetary expansion.

Oh, and they accepted 1 million Syrian refugees and didn't make ridiculous assumptions a la the UK about the likely impact (or non-impact) of (what ended up being very) large scale immigration from Eastern Europe based on neo-classical theory and an econometric model - one of the sparks of Brexit. The fact she made the case to her people on compassionate grounds was exemplary leadership by Germany and Merkel in particular. Britain has accepted pitifully few refugees.

Things are changing in Germany. LIke everywhere else their most powerful economists are likely to be educated at MIT (especially at the ECB). But until now, they have had an enviable record which should be properly studied and learned from.


This is a very good and erudite piece (as usual)!

On the subject of Germany and creatures of history, I have always had a sneaking regard for von Ranke's depressingly fatalistic comment:

“Neither blindness nor ignorance corrupts people and governments. They soon realise where the path they have taken is leading them. But there is an impulse within them, favoured by their natures and reinforced by their habits, which they do not resist; it continues to propel them forward . . .

He who overcomes himself is divine. Most see their ruin before their eyes; but they go on into it.”


Another great piece - very thorough and knowledgeable as always.

But on the 'Few Ideas are Wholly False' bit: Vanguard's UK all-share tracker is still lagging the average active UK equity fund since it launched in 2009 (after charges).

Kind of proves your point I suppose.

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