Sims was well aware he was speaking in a Germany that fears inflation much as the villagers in the Asterix comic books fear the sky falling on their heads. Without naming Angela Merkel, he said anyone who feels threatened by inflation is stupid.Ouch.
But actually it is worse than that. Fear of inflation is not just stupid, it is dangerous. And the Germans above all should understand this.
Popular mythology in Germany has it that the Weimar hyperinflation of 1922-23 led directly to the rise of Hitler. This is not true. The Nazi party was formed soon after the end of the First World War, but it struggled to achieve electoral success throughout the 1920s. In the German election of 1928, the Nazi party only managed to win 12 seats in the Reichstag. Four years later, in 1932, it was by far the largest party, winning 230 seats with 37% of the vote. What changed during that time?
Here is an excerpt from a speech given by German Chancellor Heinrich Brüning in 1931, at the height of the Great Depression in Europe (my emphasis):
Brüning used the memory of the earlier Weimar hyperinflation, together with popular hatred of war reparations, to justify extreme austerity measures. And because the scars left by that hyperinflation are so very painful, he got away with it. When the Reichstag threw out his austerity budget, it was imposed by presidential decree. Among other things, sickness benefits and pensions were cut, unemployment insurance was reduced and workers were required to pay higher contributions. There was also a brutal internal devaluation caused by deliberately tight monetary policy: during the two years of Brüning's chancellorship wages, salaries, rents and prices fell by 20%. The result was similar to the Hoover/Mellon liquidationism in the US: it made what was already a deep recession triggered by a financial crisis far, far worse. By 1932 unemployment was nearly 30%, RGDP was falling by 8% per annum and everyone had had enough. Hitler won the 1932 general election with a landslide. The rest, as they say, is history.
It was fear of inflation, fear of debt and fear of extremism that enabled the Nazi party to come to power.
Germany's hyperinflation-phobia - The Economist
The Greater Depression - Brad Delong (ProSyn)