Haunted By Hyperinflation; Germany Fears The Printing Press

BERLIN — Norbert Schulze was not yet born when the hyperinflation of the 1920s deeply scarred the German psyche. But he still remembers the Reichsmark notes denominated in millions and billions that years later were tucked into a box with the family’s old black-and-white photographs

Now, Mr. Schulze, a 56-year-old auto mechanic, says runaway inflation looms again, threatening to decimate his savings and turn his carefully planned retirement into abject poverty. It is not so much the ghost of the 1920s that he fears, but the vocal demands around Europe and abroad for a “big bazooka” of public money to reassure markets and help European countries in heavy debt.

“I’m worried about my pension and my savings and the problems we’re facing right now,” Mr. Schulze said.

Many economists say aggressive purchases of the sovereign bonds of heavily indebted states by the European Central Bank are the quickest and surest path to stabilizing the crisis. On Thursday, Mario Draghi, the bank’s president, laid the groundwork for bolder intervention in markets if certain conditions were met.

To German ears those bond purchases, or anything that smacks of printing money, sound like a recipe for skyrocketing prices. German leaders, including Chancellor Angela Merkel and her former economic adviser, Jens Weidmann, now head of the German Bundesbank, have strongly discouraged any such move by the European Central Bank, stalling the rescue of the euro zone in the view of critics.

The prospect of a dim historical memory — the antique photograph of the wheelbarrow full of nearly worthless bills — helping to drive the world off the economic precipice and into another deep recession may seem like the height of irrationality and even irresponsibility.

But the German obsession with inflation has been difficult to overcome because Germans perceive themselves as more vulnerable to inflation today than their neighbors are. It is a force they believe could reduce or wipe out the competitive and financial edge they have labored to build.

By robbing a currency of its value, inflation wipes the slate clean for debtors and savers alike. Germans say they like the slate the way it is because they are on the plus side of the ledger.

Consumer debt, whether credit cards or in many cases even home mortgages, is frowned upon here. According to figures of the Organization for Economic Cooperation and Development, the German savings rate was more than 10 percent every year between 2003 and 2009, while during the same period it bottomed out at 1.5 percent in the United States, and never rose above 6.2 percent. As a result German households had net savings of $4.3 trillion, according to the Bundesbank, in a country of fewer than 82 million people.

Germans own homes at a lower rate, 41.6 percent, than the 66.3 percent of Americans who do. And most people do not invest in the stock market here.

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