NEW YORK – The worst crisis of capitalism since the Great Depression of the 1930’s has reawakened grim memories on both sides of the Atlantic. The ghost of Franklin Delano Roosevelt haunts Barack Obama’s United States. Historical arguments over whether FDR’s New Deal worked now form an important part of American debates over current monetary and fiscal policy in general, and the US Federal Reserve’s policy of quantitative easing in particular.
In Europe, where national economic failure once led to the collapse of democracy itself, people are now asking if it could happen again. Some see another Weimar moment, reminiscent of the belt-tightening and surging unemployment that characterized Heinrich Brüning’s Germany and helped to bring the Nazis to power.
At first sight, the reasons to dismiss this scenario seem overwhelming. If the European Union has done one thing, it is to make war between France and Germany unthinkable. Thus, the entire geopolitical context is far less threatening than it was in the 1930’s.