My Weimar Reference

My reference to Weimar in last Sunday’s Kelly Letter confused a number of readers. Allow me to clear it up. I wrote:

“…a contingent of economists staking careers on inflation warnings willfully ignored, and ignore, assurances from the Federal Reserve and other central banks that it is transitory. It makes perfect sense why early data show higher prices as shutdown bottlenecks reopen and base comparisons exaggerate leaps back into action. I suspect that many showboats intoning about inflation know that the current round of reports represents a fake variety of it, but just could not resist this rare chance to shout ‘Weimar!’ in a crowded theater.”

The Weimar Republic was Germany from 1918 to 1933. Among other things, it’s known for one of the worst bouts of hyperinflation the world has seen. Therefore, people who fret about inflation frequently mention Weimar—even when observing run-of-the-mill inflation or, dare I say, transitory inflation. That was my reference.

In the same way that Godwin’s Law of Nazi Analogies holds that the longer an online discussion goes, the higher its probability of invoking a comparison involving Nazis or Adolf Hitler; Kelly’s Law of Weimar Hyperbole holds that any media obsession with inflation will produce Weimar warnings.

The two laws are connected, given that Weimar preceded the Third Reich. It was the Weimar Republic’s president, Paul von Hindenburg, who appointed Hitler Chancellor of Germany in 1933. From this relationship, the invocation of Weimar enables detractors to affix either or both of two easy labels to leadership they dislike: it is fascist and/or it is inflationary.

When Donald Trump was elected president, pundits invoked Weimar to say America had come under fascist rule. For example, Roger Cohen wrote a New York Times opinion piece in December 2015, “Trump’s Weimar America,” from which:

“Welcome to an angry nation stung by two lost wars, its politics veering to the extremes, its mood vengeful, beset by decades of stagnant real wages for most people, tempted by a strongman who would keep all Muslims out and vows to restore American greatness. … The United States is not paying reparations, as Weimar Germany was after World War I. Hyperinflation does not loom. But the Europeanization of American politics is unmistakable.”

The White House went from Trump to Joe Biden, and fascism fear mongers handed the Weimar baton to hyperinflation hyperventilators. Representative of the new group is Joseph Sternberg, who wrote in a Wall Street Journal opinion piece last February, “What Inflation Debates Miss: Inflation,” from which:

“A consequence of chaotic financial markets [in the Weimar Republic] was a new boom in speculation. The economic miseries of the era were not uniformly distributed, and the divergence between new classes of haves and have-nots stoked political and personal resentments alongside rampant corruption. Does any of this sound familiar?

“In other ways too, faint but eerie echoes of the Weimar era are starting to sound. A curious phenomenon of that time was the emergence of Notgeld, or emergency money, printed by local governments or larger corporations to facilitate commerce amid the collapse of national money. Is Bitcoin the Notgeld of our day?”

No, it is not, partly because it emerged not recently but back in 2009. That’s one slow-moving emergency.

Weimar is a permanent part of the political and economic lexicon, so it’s good to understand what pundits mean when they use it.

It’s also good to know that they’ve been wrong about it applying to the United States ever since the disappearance of the actual Weimar Republic.

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  1. John Qualtrough
    Posted June 18, 2021 at 6:37 pm | Permalink

    Excellent piece, Jason. Thank you.

    • Posted June 24, 2021 at 1:41 pm | Permalink

      You’re welcome, John! Thank you for the compliment.

  2. Posted June 18, 2021 at 11:03 am | Permalink

    Thanks for the explanation for the reference. You’ve educated me today. I appreciate it.

    Mark Russell

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