Q1: In just a few sentences explain where does the German fear from inflation comes from?
The German fear of inflation stems from almost 100 years ago. In the 1920s, also known as the Weimar Times, Germany had recently lost World War I and then turned to other European countries to borrow money; when this wasn’t enough, the German government turned to the German Central Bank and resorted to printing more money in order to pay off their debts. This resulted in one of the most destructive cases of inflation in history. At this time, money lost value by the second and people ran to the supermarket carrying bundles of money as soon as they were paid to buy goods before the prices rose again. German people still fear that this may happen again and that the money they worked hard for will be worthless; they are also afraid of what high inflation may bring as in the past it led to the rise of the Nazis.
Q2: In just a few sentences explain what does this fear have to do with the European debt crisis? …show more content…
Germany has the most stable economy in Europe yet two thirds of the population have lost faith in the euro as they fear that the European Central Bank will begin to lend money to governments. The world is looking to Germany to solve the European debt crisis and this may mean that Germans have to pay more tax. Countries in need of bailouts are turning to the European Central Bank (ECB) in the hopes that they will help to pay off the struggling countries’ debt. This strikes fear in the Germans because they think that this will lead to an increase in inflation especially if the ECB begin to print excess
The German fear of inflation stems from almost 100 years ago. In the 1920s, also known as the Weimar Times, Germany had recently lost World War I and then turned to other European countries to borrow money; when this wasn’t enough, the German government turned to the German Central Bank and resorted to printing more money in order to pay off their debts. This resulted in one of the most destructive cases of inflation in history. At this time, money lost value by the second and people ran to the supermarket carrying bundles of money as soon as they were paid to buy goods before the prices rose again. German people still fear that this may happen again and that the money they worked hard for will be worthless; they are also afraid of what high inflation may bring as in the past it led to the rise of the Nazis.
Q2: In just a few sentences explain what does this fear have to do with the European debt crisis? …show more content…
Germany has the most stable economy in Europe yet two thirds of the population have lost faith in the euro as they fear that the European Central Bank will begin to lend money to governments. The world is looking to Germany to solve the European debt crisis and this may mean that Germans have to pay more tax. Countries in need of bailouts are turning to the European Central Bank (ECB) in the hopes that they will help to pay off the struggling countries’ debt. This strikes fear in the Germans because they think that this will lead to an increase in inflation especially if the ECB begin to print excess