Is a new Germanic empire set to rise?

In his 9th October article in Britain’s Sunday Times, ‘Filthy Fritz drops us in the financial doo-doo’, Michael Lewis maintained that Wall Street had duped ‘Stupid Germans in Düsseldorf’ into buying America’s sub-prime assets.  But, he inferred, the Germans had the last laugh.

Masses of ‘stupid Germans’ bought American sub-prime mortgage assets.  Indeed 50% of all sub-prime assets were sold to Europe.  Nevertheless, one set of Germans, namely those in the Bundesbank, seems to have been totally unaware of what other Germans were doing. The Bundesbank pushed the European Central Bank to raise interest rates till the interest-rate-sensitive sub-prime mortgage market cracked in 2007, and then pushed again until Lehmans and almost the entire American banking system collapsed in 2008.  Nevertheless, the happy result for Germany was that the liberal market system was discredited and henceforth everyone looked to Germany as its economic role model.

Deflation – a political weapon today?

In 2011 everyone wants to ape successful Germany.  And it has revealed its secret – thrift!  It is setting a good example of frugality and is flexing its muscles to ensure that Southern European eurozone countries cut their deficits too.  Germany boasts proudly that countries do not dare to question its policy, lest stock market operators turn against them and they lose their precious credit ratings. Yet to a historian Germany’s policy causes acute anxiety.  Few people knew that Germany was powerful in 1930.  So when German Chancellor Heinrich Brüning decided to use deflation to rid Germany of war reparations payments and the strictures of the Treaty of Versailles, foreigners were completely deceived

In 1930 Brüning told his associates in the German Labour Federation that his chief aim as Chancellor was to liberate Germany from paying war reparations and debt.  This would require an unpopular policy of tight credit and a rollback of all wage and salary increases for the last three years.  Foolishly they agreed.  Taxes were raised, construction projects axed and salaries lowered while the beleaguered international community spent its hard-earned cash to help ‘poor’ Germany. Unfortunately, however, their effort was fruitless and merely rendered them weaker and more impotent.

In March 1931 Germany and Austria declared a customs union in contravention with the terms of the Treaty of Versailles.  France threatened to withdraw its short-term loans if Austria persisted with the union.  Austria refused.  In the subsequent banking debacle, a German bank went bankrupt and Germany was given a moratorium on the payment of its war reparations and a ‘standstill’ on its foreign loans.  Yet it has recently been discovered that Germany was the greatest exporter in the world, in 1931, with an astonishing 40% cover for every Reichsmark in circulation.  Only a year and half later Germany managed to rid itself of all the shackles of the Versailles Treaty.  Unfortunately the effort had embittered the German people.

Modern Germany’s ambitions?

The European Union has less debt than countries like Britain America and Japan.  Yet Germany has exhorted all eurozone nations to save.  Its principle ire has fallen upon the tax-evading Greeks, who have been asked to make twice the savings of any other eurozone country.  Naturally, as the crisis has dragged on, and Greece is unwilling and ever more unable to pay, attention has shifted to France, which is the most exposed to Greek debt.

France has large gold reserves and an enviable economy, but the markets are now flagging up its exposure to Italian debt, making it more expensive for France to borrow money.  We have always talked of the Franco-German leadership of the European Union but now Germany is beginning to flex its muscles.  A shadow hangs over the world economy as the fight goes on.   Yet reducing the power of France in the European Union is surely not Germany’s only objective.  It is in sight of achieving a European empire, an objective it has had since before the 1st World War.

Mitteleuropa

Pan-German League founder, lawyer and future NSDAP politician, Heinrich Class, declared before the 1st World War, that Bismarck’s unification was incomplete because it failed to include all Germans.  He envisaged the German Reich being enlarged to form a Mitteleuropa.  This would include all the members of the Austrian Empire, and all others Class considered of ethnic German stock in Switzerland, Holland, Luxemburg, Belgium, Romania and Transylvania.  It was to be bound together, by a customs union, which would prepare the way for the creation of community-wide legal and political institutions.  Eventually a Nationalstaat would come into being ‘impelled by the logic of ethnic solidarity, economic pressure, and, should it prove ultimately necessary military force’.

Modern Parallels

There is no way that Germany is going to use military force today.   However, there is plenty of opportunity to use economic pressure.  If  the 1930s are any guide, Germany will continue to use deflation until it is able to fashion the shape and political and economic structure of the European Union it wants. Yet deflation is a dangerous strategy.  In the 1930s it led to a banking crash.  Other nations in what racist Class would have called the Germanic bloc are becoming increasingly critical of Germany’s strategy.   One only hopes that Europeans don’t become embittered by its effects, as the German people did by the time they voted for Hitler.

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  • How Hitler Came To Power

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  • How Hitler Came To Power Press Release

              How Hitler Came To Power describes how what amounted to a conspiracy of the German military and industrial cliques, manipulated Allied leaders and misrepresented the Treaty of Versailles to further their ambitions, with zero regard for the human cost.
             Germany was far stronger economically by 1929 than she had been before the First World War. How Hitler Came To Power makes the case that she was primarily responsible for the Wall Street crash. By 1931 she was the greatest exporter in the world, with a mountain of cash in the bank. Yet the German people were subjected to high taxation, mass unemployment and misinformation in the cause of ridding Germany of the shackles of Versailles and returning the country to dictatorship