Neither the ECB nor the national central banks, nor any member of their decision-making bodies, are allowed to seek or take instructions from European Community institutions or bodies, from any government of an EU Member State or from any other body. Community institutions and bodies and the governments of the Member States must respect this principle and not seek to influence the members of the decision-making bodies of the ECB (Article 108 of the Treaty)

Henry’s suggestion is that the public display of frustration by the German government will imperil central bank independence in Europe, assist the longterm Gaullist project of politicising monetary policy, and likely push policy outcomes away from the anti-inflationary purist end of the spectrum.
My scepticism draws in part on the observation that German politicians have for years run an “excessive” debt-to-GDP ratio without damaging the consensus arrangements agreed (at German insistence) at Maastricht.
Nobody plans for the current unorthodox measures to be anything other than a temporary expedient, the consequences of which will need to be unravelled over time. Once more normal conditions return, treaty-enshrined independence and a clear anti-inflationary mandate will remain intact.

That said, if we get a nasty double-dip, things may fall apart in all kinds of unpredictable ways.

That would be just be absurdist theatre; Deutschland has had better credit scores than Amerika since like forever. America trying to toy around with European monetary policy, at this (late) point in the game, would be kind of like the barbarian playing with the governance of the Roman fort.

What you’re describing is known as the “paradox of thrift.” And I don’t think it’s more responsible when it collectively leads to recession and unemployment – it’s not really being driven by some underlying virtue of probity, but rather by an irrational fear of losing everything, akin to a run on a bank.

The other option is to punish the entire economy by prolonging a recession.

The post-war Wirtschaftswunder, perceived to be built on the strong and stable D-mark, is a huge source of national pride in a country that lost most other such sources in 12 short insane years.

That is one of the problems with a recession, people are holding on to their money and investing more conservatively. But in the long run, I would say this form of behaviour is actually very commendable – especially since the current crisis has been caused by irresponsible lending and borrowing practices. And aren’t we effectively punishing the people who have handled their money responsibly, by lowering interest rates and making money worth less by increasing the supply?

Re: 8, I think you are oversimplifying the situation greatly. There are many ways to make the argument that during a recession, deflation is a much greater concern than inflation. Let me try to make the point this way: the goal of a central bank it to keep the money supply more or less constant. Prices are sticky so this is pretty important. The problem with a recession is that people are unleveraging positions which are shrinking the effective money supply. The resulting distortions are relaxed with some inflation as opposed to deflation. I don’t think talk of spending money you don’t have is very accurate. The reason why is that we are concerned with increasing unemployment, which in addition to increasing human misery also leads to less production in the overall economy. This unused labor force represents lost potential wealth. So policy intended to correct that is definitely not try to ‘spend money we don’t have’, but trying to get what we do have working as optimally as possible.

I’m not an economist, but wasn’t a major reason for the current economic crisis the UK/US nonchalance about spending money you don’t have, embraced both by the respective governments and individuals. And isn’t printing more money just another way of spending money you don’t have?

Why would it be wrong to think that hyperinflation was the worst economic problem that Germany faced pre-war? I’m genuinely curious here. I know that Germany had other serious economic problems, eg the reparations, the Great Depression in the rest of the world from 1929, but I am interested in what ranking mechanism you are using to say that those other problems were greater.

The problem is, of course, that this weakens Germany’s position in the long run. Germany would greatly prefer a European central bank which pursued anti-inflationary policies and retained its independence, to one where anti-inflationary policies become the subject of political bargaining, even if, most of the time, Germany will prevail in the bargaining process.

Well, I guess the question is which the Germans want more – a European Central Bank that’s independent or a European Central Bank that’s anti-inflationary. Seems to me that a big part of the problem is that the ECB’s policies are violating part of the unspoken compact of central banking – Independence in return for nonpartisan expertise – by pushing a policy that virtually every other player in the process thinks is insane. The smart thing to do would be to “switch in time to save nein.”

In addition to the very good points made by mpowel, maybe we should note two things. First, calling something a “lesson” is a bit tendentious. Nations and individuals learn neurotic lessons as well as rational ones, and the German obsession with inflation refers back to events that are nearly ninety years old. Second, hyperinflation wasn’t some sort of natural phenomenon, but the result of deliberate German Government policy. If Germans are concerned about inflation, the answer is simple: “Don’t do that”.