Imperium

With the Euro taking up fewer headlines this week, I didn’t expect to hear from Caesar’s Ghost. But the dictator came knocking on my door.

Hail, professor!

Hail, Caesar! What brings you here?

The sweet smell of empire. Willy-nilly, the Germans are getting used to the idea that they have one and they like it. Now they merely have to pay for it.

What empire?

The Eurozone, of course, just as I told you last week. When the Germans, with French support, can unseat independent governments and dictate other countries’ policies, then they have an empire.

No doubt that is fun for the political elite but what’s in it for the ordinary German?

Prosperity. German exports have boomed thanks to the Euro, and exports are the key to German prosperity since 1999. So says McKinsey & Company – your oracle. We Romans had the Sybilline Books; you have global management consulting firms.

Are you trading your sword for an abacus, Caesar?

It has worked for the Germans, hasn’t it? The Euro is all about credit. French and German banks lend money to southern European governments. Southern European governments dole out the money to their citizens. Southern European consumers buy German products. Southern Europeans get goods and Germany gets rich. Everybody is happy until it’s time to pay back the loans.

Now that the bubble has burst, it’s time. The Germans say, “Make the southern Europeans do more work and pay more taxes.” But the southern Europeans have neither the habits nor the resources to raise the money that is needed. They can make a contribution but in the end, only the Germans have what it takes.

And what is that?

The Germans will have to agree to turn the European Central Bank into the Federal Reserve of Europe. And the Federal Reserve bails out the improvident by printing money. So it is in the United States and so it shall be in the Eurozone. The result, of course, will be a little inflation.

But the Germans don’t want that. Remember the runaway inflation of the Weimar Republic? They sure do.

Men pay a price for their fantasies. It’s pure mythology to think that there’s no middle ground between hard money and runaway inflation. A little inflation will do no harm.

But this wasn’t supposed to happen when the Germans gave up the Deutschmark for the Euro!

German politicians lied to their people when they sold them on the Euro. Now they have to tell them the truth. The Euro is too good for German business to give it up. The German taxpayer benefits indirectly from German business’s profits, but he has to pay for it. He doesn’t have to pay a lot but he has to pay something.

No people wants to accept conditions from someone at its feet but, in fact, the conquered usually has a say about the matter. The tail often wags the dog!

Besides, suppliants are usually more realistic about things than those who grant them favors. If the Southern Europeans wanted to go back to the drachma, lira, and peso, they would already have done so. Their leaders want the Euro, their people want Germany to supervise their governments. They don’t trust any politicians but they know that the people in Berlin will steal less from them than their own local elites.

Good heavens! Does that mean the Fourth Reich is upon us?

This is Germany’s moment. But this will be a new kind of empire, one based on clemency rather than on blood and iron.

Isn’t that what you claimed to be offering, dictator, when your enemies raised their daggers on the Ides of March?

But Caesar’s Ghost had already turned back to the Elysian Fields, so I received no answer.