Economics: Why Germans Fear Inflation

By robbing a currency of its value, inflation wipes the slate clean for debtors and savers alike. Germans say they like the slate the way it is because they are on the plus side of the ledger.

Consumer debt, whether credit cards or in many cases even home mortgages, is frowned upon here. According to figures of the Organization for Economic Cooperation and Development, the German savings rate was more than 10% every year between 2003 and 2009, while during the same period it bottomed out at 1.5% in the United States, and never rose above 6.2%. As a result German households had net savings of $4.3 trillion, according to the Bundesbank, in a country of fewer than 82 million people.

Germans own homes at a lower rate, 41.6%, than the 66.3% of Americans who do. And most people do not invest in the stock market here.

For the average American, inflation means the home price is increasing and the value of debt is going down, said Peter Bofinger, a prominent economist on Mrs. Merkel's independent council of economic advisers, whereas the German invested in life insurance and sitting in an apartment he rented is much more vulnerable to inflation.

For more, see German Fears About Inflation Stall Bold Steps in Debt Crisis by Nicholas Kulish, December 1, 2011 at NYTimes.com.