A Germany living on borrowed time
The narrow-minded attitude of the Germans with regards to austerity, currency and money in general is totally counterproductive in Europe’s current situation. There is nevertheless one certainty: they are sincere! In fact, Germany’s behaviour can only be understood in relation to its at the very least tormented history. Wasn’t bread worth 400 billion marks in 1923 – at the height of hyperinflation – while a kilo of butter cost around 600 billion marks? It was a very unlikely turn of events, when bosses were reduced to letting their workers go for a few hours in the middle of the day so that they would have enough time to pay them, that is, to count the outlandish amounts of cash that were to fill the gunny bags that would make up their daily salary. And so that the employee could in turn make their daily purchases – sometimes with wheelbarrows full of notes –, hurrying to spend all these marks before they lost more value! When they weren’t using the notes as firewood or wallpaper that is… How have the Germans since not learnt from this horrific, nightmarish period in their history? Reflected by Hitler in person when he declared that “inflation is lack of discipline”, making the entire German population echo this, then as they do now. This obviously didn’t stop him from frantically activating the money press when he was in power in order to finance his destructive insanity, managing to get control over inflation only through a dictatorial policy of price and salary control. Strict measures which were upheld by the Allies, with the result being an explosion of the black market and another harsh blow to the mark! The Germans’ pains were not yet over, however, since the monetary reform of June 1948 forced them to hand in all of their banknotes, and since the new Deutschmark was then worth 10 Reichsmarks this vaporised 90% of their savings! However, this monetary psychodrama was not over yet. In fact, with regards to East Germany’s assimilation, the West didn’t have the decency to absorb the “Ostmarks” which were no longer worth anything against the almighty Deutschmark…to finally renounce twelve years later this currency that they were so proud to exchange for euros!
This series of mishaps, shocks, bankruptcies and traumas illustrate in another light the unwavering attitude of a German people exasperated by instability and which carries in its collective conscience – in its painful history in any case – the stigmatisms of bad secular management. So we shouldn’t be surprised that Germany, which has one of the most modern economies in the world, is also one of the nations of the world where money is most manipulated, used and hoarded. In Germany, more than 80% of internal commercial transactions are made in cash, including for operations involving large amounts. Statistics have thus established that only 18% of payments were made by bank card, compared to a figure that surpasses 50% in France, with the average German holding twice the amount of cash in their wallet than the average Western citizen. In fact, the populations that suffered crises and banking bankruptcies are normally much more partial to cash because they do not trust bank deposits. Everyone has in mind, or has already visited, emerging or developing countries where the dollar is king. A study by the Federal Reserve Bank of New York has even revealed that the trauma of heightened inflation is being transferred to the next generation who, they too, prefer the Greenback to their own currency. While it seems obvious that such mechanisms are at work in the German psyche, their attachment to cash also reveals a much more prosaic, even primitive, thought process. They work on the basis – that they apply! – that they cannot allow themselves to spend more than the contents of their wallet. The use of cash therefore allows them to better manage their daily lives, a bit like an ant rations its food cache. It is an ancestral thought process that is ultimately typical of this people whose word for debt – Schulden – comes from their word for guilt – Shuld!
This is why consumer lending is so low in Germany. And why this country has one of the smallest numbers of home owners in the world: because of its citizens’ aversion to debt, including mortgage debt. It is an unerring sign that demonstrates Germany’s lack of confidence in the future. The German surpluses are therefore the symptom of a deep-seated problem that is becoming crucial to identify and raise awareness of because this sickness is now eating away at the entire body of Europe. As a basic mathematical outcome of a level of saving that greatly surpasses investment, these German surpluses are enough to give a clear and final diagnosis on the state of health of a country that is suffering secular stagnation all the more so since its population is in full-swing recession. In other words, Germany is dying a death.