ECONOMYNEXT – Helmut Schlesinger, who retired from Deutsche Bank 1993 as its President after helping keep Germany stable with the strong Deutsche Mark, standing against mainstream Saltwater-Cambridge inflationism that rocked the rest of the world, has passed away.
Schlesinger’s passing comes as Germany is experiencing the highest inflation and social unrest since the Great Inflation period under the Euro, and early elections have been called after the collapse of a coalition government and calls to re-establish the Deutsche Mark.
In 1952 Schlesinger had joined Bank deutscher Länder, the predecessor agency set up to issue to run Deutsche Mark and served the agency in different capacities maintaining monetary stability when the Fed fired global inflation to promote ‘full employment’.
He was a key person to develop a credible alternative anchor for the D-Mark after US macroeconomists broke the Bretton Woods system, finally destroying the Gold Standard, and the International Monetary Fund denied a credible anchor to the rest of the world with the Second Amendment to its articles.
Stability Pelican
As macro-economic policy intensified in the US in the 1960s driving up inflation in the run up to the collapse of the Bretton Woods, the Bundesbank appreciated the currency against the US dollar and later moved to targeting money supply.
“Helmut Schlesinger will be remembered in particular for his commitment to the stability of the D-Mark, which brought him international recognition,” the Bundesbank said in a statement.
“To this day, he is also credited with spreading the concept of stability, modelled on the Bundesbank, throughout Europe.
“In 1993, the Bundesbank’s then-President Hans Tietmeyer said that Schlesinger had expanded the German central bank into a ‘bulwark of stability’.”
Germany’s business daily Börsen-Zeitung had described him as a “stability policy pelican” because pelicans are held in high regard owing to their reliability, their willingness to make personal sacrifices and their nurturing skills.
During his career, he was called a ‘Bavarian Prussian’ or ‘inconvenient admonisher’, the Bundesbank said.
Monetary Stability
The Bundesbank itself had earned criticism for not printing money to cut rates.
“Its stubborn high-interest-rate policy also met with criticism abroad,” the bank said.
“Many of the European Monetary System (EMS) partner countries blamed the Bundesbank for the currency crises and rounds of depreciation of 1992 and 1993.”
Schlesinger earned personal criticism for his high interest rates.
“US Treasury Secretary James A. Baker III is once said to have accused Schlesinger of “looking for inflation under every stone”, the Bundesbank said.
As the Bretton Woods collapsed and global inflation rocketed in 1972, he was promoted to the Bundesbank’s Directorate, where he took charge of economics and statistics and thus also joined the Central Bank Council.
“These were the turbulent years following the collapse of the Bretton Woods system of fixed exchange rates,” the Bundesbank said.
“At Mr Schlesinger’s instigation, the Bundesbank introduced the concept of monetary targeting, the implementation of which contributed significantly to the Deutsche Mark’s reputation as an especially stable currency.”
Deutsche Mark Nostalgia
Under the European Central Bank now run by Christine Largarde, a former International Monetary Fund managing director, Germany experienced the highest inflation since the Great Inflation period.
Under the Euro, which also imported the Fed’s housing bubble to Europe, the AfD party, which is criticized for the Nazi-style ideas expressed by its hard liners, has made great strides in the electorate.
After each stabilization crisis coming in the wake of instability fired by ECB rate cuts, the AfD had gained more votes, particularly in East Germany where liberal ideas are less ingrained due to being in the Soviet block.
The Nazi party itself came to power amid a stabilization crisis coming in the wake of the Great Depression due actions of the Reichsbank and the Federal Reserve.
The AFD is calling for a return to the D-Mark (Dexit) but some leaders including party co-chair Alice Elisabeth Weidel, belonging to its moderate wing (Alternative Mitte) , stand for free trade.
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Quotes about Prof Helmut Schlesinger from Bundesbank
“In the eyes of many observers, Helmut Schlesinger represents the “stability policy conscience” of the Bundesbank; a man who meticulously scrutinises monetary statistics in order to detect signs of inflationary risk.”
Frankfurter Allgemeine Zeitung, 31 July 1991
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“Being an experienced mountaineer, Schlesinger does not lack stability or stamina; (…) when he took office as top cat at the Bundesbank, with all of the attendant publicity, he brought with him the kind of detailed knowledge that only a renowned monetary expert can possess. (…) In addition to his powers of endurance, Schlesinger is characterised by the great loyalty he shows to the institution in which he has grown up. He is the true boy scout of German central banking.”
David Marsh, Die Bundesbank, 1992
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“During your term as President the European monetary system suffered three serious exchange rate crises. That the system could ultimately be saved is very much thanks to services rendered by yourself and Professor Tietmeyer”. (…) Every decision we made was closely monitored across the world. Occasionally they would garner praise but more often they met with criticism, of a kind which invariably singled out the President himself as a scapegoat. He bore such attacks with admirable grace and always remained calm”.
Welcome address by Dr Günter Storch, Member of the Executive Board of the Deutsche Bundesbank, 1 October 1993
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“Schlesinger’s all-round expertise coupled with his scientific discursiveness have always remained beyond any doubt; in this respect he has set the standard for his future successors as well as for bank employees in general.”
Zeitschrift für das gesamte Kreditwesen, 4 October 1993
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“He was described as being like a “falcon” when strategic decisions had to be made in the area of stability policy. However, it would have been more fitting to describe Schlesinger as the “stability policy pelican” as pelicans happen to enjoy great respect owing to their reliability, their willingness to make personal sacrifices and their nurturing skills.”
Börsen-Zeitung, 8 June 1994
(Colombo/Dec28/2024)
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