The Obama team argues that with recession on the horizon for Europe, the threat of inflation is low and the real threat is a great depression. Administration officials, and many economists, argue that Germany is remembering the wrong crisis — it should be focused on a repeat of the deflation and contraction of the 1930s, not a repeat of the hyperinflation of the ’20s.
Many Germans also view the Anglo-American infatuation with the financial industry as the root of the West’s decline in competitiveness with the rising East. Big banks create and exploit bubbles, requiring huge bailouts, they say, without creating sustainable growth.
In the end, Mrs. Merkel’s view clearly won out over Mr. Obama’s. “Merkel is calling the tune and writing the notes,” said Mr. Joffe, the publisher of Die Zeit. Whether Mrs. Merkel’s strategy works is a question that markets will begin to ask on Monday, whether she likes it or not.