Fed Study Ties 1918 Flu Pandemic to Right Wing Extremist Gains

Well, this is quite a justification for more government spending and for keeping an eye on "right-wing extremists."

Politico sets the scene:

A new academic paper produced by the Federal Reserve Bank of New York concludes that deaths caused by the 1918 influenza pandemic “profoundly shaped German society” in subsequent years and contributed to the strengthening of the Nazi Party.

The paper, published this month and authored by New York Fed economist Kristian Blickle, examined municipal spending levels and voter extremism in Germany from the time of the initial influenza outbreak until 1933, and shows that “areas which experienced a greater relative population decline” due to the pandemic spent “less, per capita, on their inhabitants in the following decade.”

The paper also shows that “influenza deaths of 1918 are correlated with an increase in the share of votes won by right-wing extremists, such as the National Socialist Workers Party” in Germany’s 1932 and 1933 elections.

Together, the lower spending and flu-related deaths “had a strong effect on the share of votes won by extremists, specifically the extremist national socialist party” — the Nazis — the paper posits. “This result is stronger for right-wing extremists, and largely non-existent for left-wing extremists.”

Perhaps Kristian Blickle, the author of the paper, should take a look closer to home--as in central bank money printing as a cause of social unrest.

This might be of interest to him:

The greatest inflation in the history of Germany occurred mainly from 1919-1923, but in fact it had already started in 1914, with the outbreak of WWI. When the war began, the German governments increased the money supply in order to cover the soaring costs, initially of the war itself, and afterwards, of the heavy reparations that the Allies had imposed on Germany in the Treaty of Versailles. One means of increasing the supply of money was the issue of war bonds purchased by many citizens. At the same time, it was decided to cut the linkage between the German mark and the price of gold, a connection that existed at the time in most advanced nations. The result was an expanding gap between the value of gold-based currency (the gold mark, which was actually in use until the end of the days of the German Empire) and paper currency, which could be printed in almost unlimited quantities. Flooding the market with printed money rapidly lowered its value, so that the prices rose disproportionately, while the real wage of salaried workers fell sharply. At the same time, loans and debts lost their value by the same proportion...

This situation took its toll on the daily life of most citizens. The rise in prices that the consumer was required to pay was not matched by a rise in wages. Since wages rose more gradually, it was more difficult to keep up with the high prices...

In November 1923, the inflation reached a peak: one dollar was worth 4,200 billion German marks...Following this, the German economy recuperated over the coming years, but millions of citizens lost their capital, which had been deposited in savings plans.

 -RW