Interwar Germany, The Marshall Plan & Post Millennial Greece

This post is a published copy of a draft blog found here content should be identical except for tags. The 128bit tag (CDFB2AF9833A4) on this post is identical to the tag on that post.

As a student of history, we learn about events, but sometimes not from events.  Many events within the last century seem to be repeating themselves.  Aggressive dictators slowly grab land based on ancient territorial claims. "Haves" may blame the "have-nots" after possibly enabling the latter to be dependent.

In this post, there will be an attempt to remind the readers of past events, their conclusions and how current events may be similar. Generally accepted western history shows that after the first world war, the victorious powers imposed tough sanctions against the losing powers.  The German Weimar republic suffered and struggled  to pay of its war debts.  Misery in that country led to the election of a loud mouthed populist that promised to give "Dignity" to the German people.  The rise of Hitler and the resulting second world war  was fresh in the victors memory  when Germany was once again defeated at great cost of life.  Europe was devastated. That time a new way was proposed. It became known as the Marshall Plan (officially the European Recovery Program, ERP).  Overly simplifying it, basically the victors bailed out the destroyed economies. The United States spent a lot of money and in return earned a lot of it back through the purchase of American goods and services by the beneficiaries.

Timeline, one of my new favorite news aggregators, published a set of stories about public spending and explained the Marshall Plan in context. (see Link Below right #1)

Recently a major anniversary of the Holocaust brought to light the extraordinary effort the German nation puts on educating the young people the atrocities carried out in the name of Germany by the fascist regime of the Nazis.  Have the Wiemar years of foreign humiliation and austerity been forgotten?  Now that Germany is rich, do they not remember what it was like to be poor?

Absolutely, this is not an exact match for what is going on. Self-made men and women, sometimes have disdain for those that rely on handouts and excuses. But is any self made power created in a vacuum? Do the winners better use the gifts around them and perhaps use them more efficiently through skill or luck?

China seems to be ridiculously rich. Apple seems to be ridiculously rich. Bill Gates and Warren Buffet are  ridiculously rich. Could any one of these band  with one another, and create a modern form of the Marshall Plan (or Lend-Lease) for the struggling economies.  Where  does one start? Many rich donors like to give anonymously because when they give publicly, grasping hands seem to materialize in a sphere around them. So perhaps naming names isn't a good idea.

The so called Euro-zone is essentially flawed. A goal of  a central bank is to be the bank for banks.  Allowing the short term ebbs and flows of capital to smooth over and not snow ball into panic. Politicians want to oil every squeaky wheel they hear. Having an independent central bank helps to cure that.  Currently each member country seems to have their own central bank with differing degrees of political autonomy.  Could the ECB  be molded  into a more Federal system, with the country CBs being like the regional Feds in the United States?

Links

Big Public Works in America: Who Foots the Dam Bill! - via @Timeline_Now   CCTV Dialogue January 30, 2015

in 2008, had the Fed not been absolutely independent, it could not have saved the day like it did.  It reacted with hours to spare saving the world economic system from collapsing to a system of barter of beads. At the time of this writing the ECB basically ignored its role as lender of last resort to Greek Banks, but retaining that role for the Greek Central Bank. Changing lanes in the middle of a traffic jam, rarely gets a driver home faster. Member states of the EU don't even have the ability to intervene with monetary stimulus anymore. The ECB must.

Is this blogger hopelessly naive? Should/can angel white knights Marshall plan Greece to recovery? Should Warren Buffet move International Dairy Queens world operations to some high unemployment town and hire everyone? Should Apple build a European design center in Athens? Should Bill gates stop buying computers for kids in Africa and start distributing Greek goods?  Greece needs jobs, hard currency, things to spend them on, allowing the shop keepers to earn money to buy form other shop keepers. Did Europe and Japan ever repay the USA?   Could we "change our mind", demand repayment at current value, then flip it over to help Greece, Portugal and Spain etc?

This blogger has an advanced degree in economic theory. The concept of velocity of money, and the time value of money is a difficult one to grasp for some readers.  Essentially, how fast does a single Euro move through the economy.  People like to think of money as a consumable good.  But a better analogy is the food cycle. Rain falls to the ground and nourishes the planted seeds.  They sprout and create food stuffs and oxygen. Plant eaters consume the plants the plants, digest the digestible and expel waste.  The waste in turn nourishes new seeds. Meanwhile meat eaters eat plant eaters and have a similar process and so on.  Farmers collect seeds from the wild, plant them harvest them, save some to plant for next year. A Euro given as a tip to a porter, is spent by the tipper, but is earned by the porter, who in turn spends it to an earner and so on. When someone has money to burn, unless  they truly burn it up, the flames are actually income  to the economy.

In college a group of friends played a complicated board game that combined the conquest action of a game like Risk, with the economic functions of a game like Monopoly. Late one night, a player decided he had enough, but did not want to be a quitter, so  he decided to spend recklessly and try to lose.  The result was the opposite, the reckless spending stimulated the games economy, and it seemed to make it last longer. The velocity of money increased, and it was like each dollar was spending like it was a dollar and a half.

At the time of this writing the concept of a Marshall Plan like bailout for Greece had been proposed by the Galloping Greek finance minister, Yanis Varoufakis.. This writer was unaware. Chiding Germany for seeming to ignore the periods of economic chaos before and after WW2 seems logical to this blogger. A January 30 discussion on CCTV's program Dialogue. also implies support of this idea. (Above right #2).


In conclusion. Something needs to be done.  Rich Europe needs to help poor Europe.   If only to kharmically pay back the benefits of the Marshall Plan.  Someone even call this idea the Merkel Plan

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and so it goes
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