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How German History Shapes Obama-Merkel Rift

(AP Photo/Gero Breloer)
Despite the president's claim at a joint appearance this afternoon that "I like Chancellor Merkel a lot," President Barack Obama and Germany's Angela Merkel are widely believed to have a somewhat frosty relationship. The biggest perceived rift between the two? How best to respond to the global financial crisis.

Mr. Obama, of course, has pushed through a massive stimulus package and pressed for greater government spending worldwide to end the recession. Merkel, who helms the largest economy in Europe, has resisted such spending; her government has passed only a pair of small stimulus packages in response to the economic crisis.

One reason for the two leaders' different philosophies is ideological: Merkel is a center-right politician who has argued against bank bailouts in Europe. But German history is also a factor. Under the German parliamentary governmental system known as the Weimar Republic, Germans faced hyperinflation in the 1920s that destroyed savings and drove many people into poverty. Here's one (fictionalized) account of what it was like:

The price increases began to be dizzying. Menus in cafes could not be revised quickly enough. A student at Freiburg University ordered a cup of coffee at a cafe. The price on the menu was 5,000 Marks. He had two cups. When the bill came, it was for 14,000 Marks. "If you want to save money," he was told, "and you want two cups of coffee, you should order them both at the same time."
The Weimar Republic stayed in power in Germany for another decade, but the period of hyperinflation is considered a significant factor in the emergence of the National Socialist German Workers' Party – the Nazis.

Germans are thus particularly attuned to the dangers of inflation – and particularly wary of fiscal policy that they fear could bring it about.

"We learned from the worldwide economic crisis of the 1920s that an economic crisis can result in an incredible threat for all of society," Interior Minister Wolfgang Schaeuble told Der Spiegel magazine, as the Washington Post reported last year. "The consequences of that depression was Adolf Hitler and, indirectly, World War II and Auschwitz."

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