PRINT November 2011


BRETTON WOODS: It’s a phrase that has the ring of a fairy tale, but of course it’s simply the name of the New Hampshire town where, in 1944, delegates from the Allied nations came together to decide how the world economy should work. Nevertheless, for most of us, the global monetary system that evolved from the Bretton Woods agreements is as darkly mysterious as anything imagined by the Brothers Grimm. In Wert (the term is German for “value”) a special project for Artforum related to his new film, untitled at press time, Glasgow-based artist DUNCAN CAMPBELL relates the tale of one of this system’s most influential adepts: Hans (born Johannes) Tietmeyer, renowned German economist and bureaucrat nonpareil. As in his films Bernadette, 2008, which looks at the career of Irish activist and politician Bernadette Devlin McAliskey, and Make It New John, 2009, which traces the near-Homeric rise and fall of car manufacturer John DeLorean, Campbell here finds a quasi-fictional register commensurate with the strangeness of the true-life stories he explores. In his narrative, the global economy’s abstruse policies and arcane protocols, obscure institutions and unseen machinations, become the stuff of fable.

Photo: Jack Delano.

AS A WESTPHALIAN OAK I think of you, dear Johannes, specimen of the orientations of truth and strength that that far-famed tree is said to signify. Above even these stout qualities, the oak is said to be the embodiment of perseverance, or perhaps, in your case, some might use the expression stubbornness; but that too is part of the Westphalian heritage you cherish so dearly, a hidden connection and correspondence you would not deny! In Münsterland earth you have your roots, but even the most promising sapling would remain stunted without suitable soil. These last prerequisites, in the case of your upbringing, have not been wanting—the modest, orderly home environment provided by your father, a municipal treasury inspector; the sensitive guidance of spiritual counselor Alfonso; the upright community to which you deferred—all have combined to supply you with the nourishment of Catholic Church culture, mixed, of course, with a good measure of Prussian discipline!

Who among your fellow miners realized—whilst working below the ground in the coal mine Augusta Victoria—that within you the sap of conscience, sound judgment, and the choice, lucid use of words were already clearing and maturing; qualities that would one day have great consequences? Now your cheeks are blackened like the rest, but did they for a moment suspect that one day you would rise to the upper world to take your place at banquets, in staterooms: around you when you spoke, an atmosphere of calm discernment that inspired conviction in the hearts of adjutant and leader alike? In their mind’s eye did they ever imagine that you would rise to receive the Great Cross of Merit with Star and Sash of Merit, to wear it but lightly, knowing that one’s true worth is not displayed on the enamel round one’s neck but deeper inside the breast? But forgive me, Hans: I must resist such rousing denouements and the temptation to blurt out everything in advance. From now on I mean to follow the order of the events of your career conscientiously and to stop anticipating.

The Vechte Valley brought you forth—that blessed and benign region rich in towns and cities, temperate in its climate, but only moderate in the quality of its soil. Here, the favored town of Metelen, renowned for its aviary and the place of your birth, lying just south of the bend that the river Vechte makes as it flows into the Dutch province of Overijssel. How hard the people of the town—a community of some six thousand souls—had to work in generations gone by to bring the barren hinterland under cultivation! In meager supplement, the alluvial forests of the valley yielded their bounty: timber applied in the production of native wooden shoes, oak bark for the tanning of leather, and acorns to fatten swine and turkey. It is said that it was cultivating and gathering in this way—unremitting toil for low return—that shaped the honest people of the region.

For those on an excursion to this fine, red-bricked town, the street name Seidenweberweg, “Silk-Weaver Path,” recalls a more recent source of livelihood, the weaving and spinning mills, bleaching grounds and dyeing establishments, that, in a great swell of human ingenuity, sprang up along the valley—new industries meeting the clothing and textile needs of the growing population of the German Empire. It was at just such a mill that in later times you worked cleaning textile machinery to finance your studies, preferring this to other tasks for the few extra pfennigs of a dirt allowance that this work gave! Alas, in Westphalia this prominent industry has declined in importance, as revealed by the statistics relating to the number of firms and employees. But it is difficult to imagine that it would vanish completely from the production landscape. Seat belts, tents, and medical dressings are, to this day, growing product groups. And in the field of clothing manufacture, in spite of global competition, many firms stick to their home location, because the label “Made in Germany” provides a competitive advantage, for it is thought to represent quality. But I am falling again into my old fault of anticipating.

To gain a clear picture of how your character was formed, Hans, I will now speak of your education, which was by no means an ordinary affair. When in generalities I spoke earlier about your upbringing, I mentioned the importance of your Catholic motivation, and so it was at the University of Münster that you were enrolled to study Catholic theology. This calling lasted less than one full term before you moved suddenly to the department of economics—an unusual decision, and one somewhat at odds with the picture of tenacity I have attempted to sketch so far. Had you so soon and so frivolously turned your back on the traditions of your little homeland? Nothing of the sort! Though the rationale for your about-turn might not have been fully formed at this stage, one can plainly see with the benefit of hindsight that you were still pursuing a reasoned goal. It was fate, or perhaps not fate but rather what is called fate yet was actually yourself, working through an unknown but infallible impulse, through which you discovered a more fitting aperture for your desire to be of service. It was the approximate, budding sense that, to speak parenthetically, “social commitment requires an economic basis” that endowed the eager but formless predisposition to do some good in the world with an emphatic breath of significance!

Photo: Egon Steiner/Bundesarchiv.

But that is as far as my familiarity with these matters goes. It should be much in the wrong for me, on the basis of nothing observable, to speculate as to what introspection occupied you during your time at the economics and social sciences department, as you attended its lectures and worked in its seminars. I have little doubt that you immersed yourself with great enthusiasm and profit, but I am only guessing. I might venture that you were subjected to strong impressions and encountered ample food for thought, but without absolute certainty. As I search for impressions of your student days, it seems a great shame not to have come across any circumstantial picture, despite its unimportance, of what company you kept, what cafés or places of entertainment you visited, or even how you were housed. But of much more consequence: At what point did your researches gain their direction and ultimate focus? Did microeconomics, for you, ever hold any charm? How did the principles of the social market economy (or soziale Marktwirtschaft—Professor Alfred Müller-Armack’s phrase is more euphonious in the German) first engage you, first engage the feelings of the ambitious youth that was you? I have to confess that with respect to this period of your career I am, so to speak, empty-handed. As I wish, above all, to honor the truth, I would instead like to suggest, to those who might be interested, the contents of the following textbooks in the hope that they might better indicate the far reaches of your first displays of self-dependent thinking. I admit that it is a coarse substitute, but does not all writing, during its metamorphosis, in respect of content and form, necessarily regard itself ironically? Does it not regard itself ironically in order to be able to outgrow itself? And so:

Kriegsfinanzierung und Schuldenkonsolidierung
(War Finances and Debt Consolidation)
Ludwig Wilhelm Erhard
Verlag Propyläen, 1944
Erhard speaks out for the “aktives und wagemutiges
Unternehmertum” (active and courageous entrepreneurship)
that was intended to replace bureaucratic state planning of the
economy in Germany after the war.

The Road to Serfdom
Friedrich Hayek
University of Chicago Press, 1944
Planning, because coercive, is an inferior method of regulation,
while the cooperation of a free market is superior “because it is
the only method by which our activities can be adjusted to each
other without coercive or arbitrary intervention of authority.”

Der Christ und die soziale Marktwirtschaft
(The Christian and Social Market Economy)
Patrick M. Boarman, Berthold Kunze, Alfred Müller-Armack,
and Ludwig Erhard
Verlag W. Kohlhammer, 1955

Human Action
Ludwig von Mises
Yale University Press, 1949

The Open Society and Its Enemies
Karl Popper
Routledge, 1945
In particular its second volume, The High Tide of Prophecy:
Hegel, Marx, and the Aftermath.

The above list will, if nothing else, serve as a threshold to the copious principles of the social market economy. At certain times in the history of ideas, theoretical and applied research become almost indistinguishable. With the concept developed by Professor Müller-Armack given agency in the world, indeed given the force of government under Federal Minister of Economics Erhard, this was just such a time. As a young man, Hans, during the golden days of the Wirtschaftswunder, it must have been thrilling for you to observe as these ideas bore fruit. Cashiered German towns and cities were recast. Central streets that had been gored by bombs were once again a rush of noise and faces. Placards and advertising pillars proclaimed a fantastic roll of goods in inexhaustible variety. The shrill cry of newsboys. Street-mounted cigarette machines dispensed their brightly colored packets. At the modern portals of film theaters, neon enticements shone out their unearthly light. And everywhere, behind the shining plate glass of stores and shops—glittering arrangements of unimagined but affordable luxury.

What an attack on the senses and nerves, what sensuous delights, in fact, lay in the uninterrupted succession of scenes these windows provided! Here an arcade-fronted men’s fashion shop offering the latest favored style of patent-leather shoes, pin-striped shirts with French cuffs, pliant calfskin gloves, socks spread in an attractive pastel wheel. Here a stationery store supplying notepaper for all types of correspondence. And who could forget, after the meager and plain diet in those years after the war, the bakers’ shops whose windows offered Blechkuchen, Schwarzwälder Kirschtorte, voluptuous Berliner Ballen and Biskuitrolle, and out of whose doors gushed the warm creamy smells of paradise? Or the equipoised splendor of the department stores’ fronts where, in elegant rows, gleamed fragile glassware, bold electronic razors, cultured-pearl necklaces shimmering on fine runners, tri-band radios, knapsacks, collapsible kerosene stoves, brilliant white underclothes . . .

But again I beg your forgiveness, Hans, for reporting so little at such a great length! Worse than this, I am struck with sudden and sharp misgivings about the propriety of the above lines; concerned that the picture I have sketched might somehow become confused with an account of your life, your own immediate experience. By providing this vista I have regrettably allowed the impression to build of you as a somewhat dissipated youth whose formative years were spent in a state of sensitive loneliness gazing through the bright panes of shopwindows. Nothing could be further from my intention! To those, however, who might see my vignette as clumsy and superfluous, I hope they will soon see the error in their description and withdraw it. For what more instructive, educational aspects of the world exist than its objects? What is more telling than the pull those objects exert? What better way to designate the longings of a society than by observing the trade in these material things? Here, Hans, one must think not only of enrichment from trade, but of enrichment through trade. These italics must be understood aright, for they point to the distinction between, and at the same time the amalgamation of, means and ends, in which the former takes on a narrower meaning and the latter a more abundant one: the coming together of means and ends in which lies the Common Good!

The Common Good. Such a shopworn phrase, Hans, but I can think of no other. Certainly it does little to convey the excessive, silent region of each exchange between customer and attendant where the truest interest of both lies. It is here that each wordlessly abides by his obligation to decency, newness, and freedom. And the plastic current of this sympathetic interchange? The second-series deutsche mark; hardly noticed at times, but present and irreproachable, proffered and returned, from one hand to another, in token of silent approval. Following on from the hungry years that came after the war, what tempered this prosperity against softness was—I cannot find a better word—a certain melancholia, melancholia born of doubt and subdued pride. For Germans could not simply get back to normality; the immediate past was too haunted to allow for such an act of forgetfulness. And to the east lay the Deutsche Demokratische Republik, whose bleak radiance cast questions of legitimacy over the present and premonition over the future. But the resulting air of transitoriness did not destroy value. Far from it; it was the sense that nothing was permanent that gave prosperity its reason and what checked it against mindless overfullfilment. It was transitoriness that lent existence in West Germany its rationale, dignity, and charm. For only that which must struggle for meaning between a beginning and an end is interesting and worthy. Transitoriness has given it its purpose.

And what of the East? What can be said of East Germany? It was by no means an ordinary place—a living argument rather than a living state, all propaganda and no human life. It failed through not having enough human life to judge the human life in its citizens. All its gray apparatus and functions—its bureaucracy, its wares, its violence—were blankly dispensed: that is, dispensed with an expression of indifference that was barely animate and that bordered on affectation. . . . But I am conscious now, Hans, of the surprised look on your face: Have I so soon forgotten what I said earlier? Is this the same place whose sullen presence lent life in West Germany its special purpose? The doubt applies but can be easily clarified by pointing to the distinction between an interim and retrospective perspective. For let us not forget the mesmerized disquiet that people in the West at one time felt over growth in the East, over the gauche materialism that, for a time, looked like it might be a serious rival for the social market economy in West Germany. But how often does it happen in dreams that priceless things come into our possession, yet when we wake, our hands are empty? For those in the Secretariat, the temptations of the algorithms and equations that regulated supply and demand proved too much. Soon these calculations were used to rig prices, to pile raised production quotas and increased demands for productivity onto the dilapidated Kombinat and the Volkseigener Betrieb. Of course, Hans, there is no doubt now that it was West Germany that shone as a place of hope and opportunity to the millions of Germans from the East who were trying to get there, but it was not always so. The land and the people were the same; only the system was different.

But what of your career, Hans? Let me assure you that I have not forgotten you entirely and that I do not propose to fill my entire statement with such digressions! Herewith I leave the historical subject in treatment and proceed to the moment that was to be the next turning point in your career and that terminated your brief sojourn and employment in the offices of the Catholic Bishops Fund. With your credentials in perfect order, you arrived in Bonn to assume a position, first as ministerial counselor on matters of economic policy, and later as ministry secretary and director of political economy. In both capacities you quickly became renowned for your reliability; your great appetite for your work became something of a legend. Nothing, I am sure, escaped you; you pored over every detail of your brief until on pertinent matters you were informed to the fingertips. But such grand bureaucracies tend not to pay much attention to talent that has just arrived on the scene. More than that, once his feet are under the table, there is a strong inclination to keep a man where he happens to be. Correspondingly, many clerks simply resign themselves to this fact and, having achieved only modest rank, heed the easy advance of a sheltered existence. Such assent was not in your nature, and besides, the ballast of your conscience listed constantly and uneasily toward the stagnating German economy at this time: The Wirtschaftswunder had given way to stagflation, and great difficulties now lay in the path of growth. Once this unpleasant problem had been recognized, it followed that something must be done, and so, with others of a like mind, you sketched out a plan. Your hour had come, Hans!

Photo: Kurt Rohwedder/bpk.

I will permit myself to say, without wanting to burn up all my powder in advance, that with your actions went great professional risks. But of course it is useless to warn the courageous against some course of action on the grounds that it requires courage. Taking great pains, and covering a great number of sheets, you composed a letter, an urgent letter, the so-called Lambsdorff paper, a clinical report on the rotten state of chancellery spending and a trumpet call for budgetary rigor. This prophecy proved instant and decisive as a switch of allegiance by the Free Democratic Party to the Christian Democratic Union gave rise to the Bundesrepublik’s sixth government. As always amid great turmoil, there were those who gnashed their teeth. Indeed, among the functionaries and attachés who were your colleagues, there must have been those who were of the opinion that by your action, you had transgressed the special dignity and order within the civil service that dictated that it was the politicians’ lot to decide, and yours to fulfill. Honest fellows, they simply accepted whatever form of reality was handed to them and, as it were, got on with the job. But that has never been your way of meeting experience. There is, perhaps, within you a tendency toward critical reflection that favors self-sufficiency and inclines you, at the end of the day, to reflect inwardly and to “neither by praise nor by fear let yourself be deterred from your path.” What marked you out was the acquiescence with which you accepted the need, in spite of the personal risks, for action—not some vulgar display of ambition. Because of your confident instinct, it seemed only natural for others to presume that fate had something special in store for you, and it was on this basis that the promotion you achieved came your way. But I doubt that you allowed yourself even a shiver of joy at the thought of the equality of seeming and being that life was granting you. Helmut Kohl was in the Palais Schaumburg, and outside the birds sang in the trees.

I do not know why one in particular among the many pictures I have seen of you from this time clings so persistently in my memory that, despite its insignificance, it fills me with retrospection even today. It is nothing, only for me it is enduring. You are standing in the foreground of the picture—brightly illuminated by the camera’s flash—in a carpeted lobby. The lobby is almost bare, save for a suited man caught midstride and a potted tropical plant, almost merging with the darkness of the far wall. You are flanked by two other men. Both look preoccupied: One stares inwardly, adjusting his tie; the other gazes intently at the ground. You appear closest, looking over the stepped lapel of your suit directly into the camera’s lens, still wearing your glasses from reading. Your eyes are soft, almost sedate, but within them is a hint of reproach toward the photographer: Your lips are pursed as if caught in the act of forming a word. Once again, it is nothing, but for me enduring.

It was commonplace then to abbreviate your title—Secretary to Federal Finance Minister: International Affairs—to Chefunthandler or to the charming name Sherpa. In most respects, your new vocation was the same as your previous role: You were still required to present yourself in your usual reassuring garb and to bring to bear the rigors of your bureaucratic training. But now you were also a member of a more general profession—as a negotiator—that called for an altogether more subtle and engaging dexterity, both serious and easy, as you entered into dialogue with aides and statesmen at summits at the Hall of Mirrors at the Royal Chateau, Versailles, France; Colonial Williamsburg, Virginia; Lancaster House, London; the State Guesthouse, Tokyo; or as you mounted the home steps at Palais Schaumburg: wherever the Bretton Woods institutions or their complementary body the Group of 8 might happen to meet. There, page on page, in faithful sequence, general aspirations were laid out and supplemented with specific issues in the texts of the declarations and communiqués collectively produced by those assembled. I will not attempt an exhaustive survey, but certain striking themes are easily recognizable—the desiccating interlude of recession, disorderly conditions in international-exchange markets, the work programs of the General Agreement on Tariffs and Trade, budget deficits and bloated taxation, the structural adjustments necessary to address the debt burdens of third-world nations, air-jacking, Afghanistan, and the Iran-Iraq conflict. I have selected a small section, a few fragments, to record here.

September 20th 1988

Today, with the Commando Khaled Aker, we attacked the Secretary of State for the Minister of Finance, Hans Tietmeyer. Tietmeyer is a strategist and a key figure in international crisis management, which, on the national, European, and international levels, strives to render the economic crisis of the imperialist system governable and to prevent the collapse of the economic and financial system. He is deeply involved in the formulation, coordination, and establishment of imperialist economic policy—in recent years he had a part in every important monetary and economic decision that was taken. He is responsible for genocide and widespread misery in the Third World. As a delegate to the IMF and World Bank, to G5 and G7 meetings, world economic summits (which, since 1982, he has organized as the government’s representative), he developed and enforced the imperialist policy of extermination through hunger and counterinsurgency against the people in the dependent countries in the South—a policy which for the majority of the world means misery and death, all in order to secure profits and power for international capital.

Photo: DPA.

He is responsible for the intensification of exploitation, poverty and oppression in West Europe. In different EC Committees, on the bilateral (as in the German-French Economic and Financial Advisory Committee) and on the national level, he has laid the groundwork for the aggressive restructuring of capital and the expansion of transnational banks and corporations throughout West Europe—which means greater exploitation and the destruction of millions of people’s livelihoods—especially in the poor countries of Southern Europe and in Ireland. Imperialist crisis management means more and more misery and death in the metropole and in the Third World. It is the attempt to stabilize by any and all means the current intensified and catastrophic confrontation between imperialism and liberation; it means countering the growing liberation struggles and the system’s internal breakdown, as well as preventing any further collapse. Imperialism can only develop destructive power; its essence is destruction. By establishing world rule, imperialism imposes the extermination of peoples through genocide; it imposes a senseless and degrading existence, in the face of which there is the constant reality that people, wherever they are, cannot live in this system. For this reason people everywhere are developing and reinforcing themselves in opposition to imperialism and in favour of self-determination and human dignity. These shared conditions and goals form

Our nations are united in their dedication to democracy, individual freedom, creativity, moral purpose, human dignity, and personal and cultural development. It is to preserve, sustain, and extend these shared values that our prosperity is

Bonn, Sept. 20 – A pair of assailants with shotguns fired on a senior West German government official today, missing him but raising fears for the security of a congress of the International Monetary Fund and World Bank scheduled for next week in West Berlin. Minister for Finance Gerhard Stoltenberg said the government was “deeply shaken” and added: “We must assume that this awful incident is connected to the forthcoming annual meeting of the World Bank and the IMF in Berlin.”

How lightly, Hans, how impatiently did those gunmen, intending your death that morning in Bad Godesberg, lie in wait in that small copse? With what glibness, what insusceptibility, did they discharge their weapons in the direction of your car? Their inept action has prompted much reflection on my part on the senseless and degrading cruelty that a group of human beings feel entitled to manifest toward their fellows. They have made a cult not of a politics but of a pubescent bourgeois guilt. . . . I must refrain from passing moral judgment. But in reading their communiqué, Hans, I have become preoccupied with the idea of interchangeability. The tenor of their expressions “self-determination” and “human dignity” is directly interchangeable with the aspirations contained in the communiqués of the Bretton Woods institutions. In fact, it seems to me necessary to insist that the privileged virtue these would-be killers proclaim is mimetic and based on the same economic and human abomination of that of those they claim to oppose. Action and further abomination are almost as strongly an obligation as they are an inevitability, and therein sits the deadliest trap of the exhausted conscience. But consider these merely as questions raised, for I am uncertain as to the answers. Did they seriously propose Albania as a model? Did they suppose that its populace suffered and endured a life of numb sorrow and social rootlessness for the love of anti-revisionism? And wasn’t it precisely in demanding a free and humane society that people in Gdánsk and Berlin would show themselves capable, without need of a vanguard, in asserting their own self-determination, that caused them to paint voluptuous urgent frescoes on the walls that held them captive, that unleashed the drunkenness of yearning, hope, and joy that brought these walls down?

These events are now famous; we are all familiar with the scene, somewhere between action and accident: In central Berlin, a youth in civilian clothing squeezing through a rough opening that has been torn in the wall and being presented with a bouquet of flowers from the upstretched arms of a tearful woman in the crowd below. But at the time no one had ever seen anything like it. Each time the footage was replayed, the two young people, fleetingly but profoundly glimpsed, became less and less like themselves and more dreamlike, more primal and indivisible, more—how shall I say?—they became like freedom itself. Yet for all my admiration for this famous newscast, for all its spaciousness and splendor, I have for it a certain distrust. I have you and the part that you played in these events to thank, Hans—for allowing me to penetrate beyond the mere enjoyment of this noted news item’s surface to the heart of the events it depicts. After the seething, colorful cascade of sights had subsided, the slogan of the peaceful revolt in East Germany, “We are the people,” was quickly replaced by another: “If the deutsche mark doesn’t come to us, we will go to the deutsche mark.” Freedom was not an image or a place, Hans; freedom was the deutsche mark. That was what was in the heart of the youth and others like him as they made their way West. And it was to negotiate the delicate terms of monetary reunification that Federal Chancellor Kohl called on you. There could be no other choice, for although you had by now achieved a place on the directorate of the Bundesbank, you were not a “Bundesbank man”; the world politics and the world of daily affairs were not foreign to you as they were to the typical Bundesbank man. In short, you could be relied on to come up with a just solution that kept the money supply at a reasonable level while at the same time reflecting the deep desire of Germans to be one again. And so it was, a year before the two countries were politically rejoined, that pensions, wages, and savings of up to six thousand eastern marks per person were exchanged overnight on a one-to-one basis; and overall, though you called for a rate of two eastern marks to one deutsche mark, a ratio of 1.83:1 was happily achieved.

These essential details that have been relegated to footnotes were in fact the main act in this drama. For what is currency, Hans? Currency is more than just a part of the economy; currency is a reflection of what a nation desires, suffers, is. Nothing can reveal more clearly what a nation is made of than its monetary policy. Consider more closely the two examples I have offered. Here the mark of the DDR: a currency whose value existed only in arbitrary formulas and algorithms, whose pursers abandoned it in favor of barter, time, and other hard currencies. And here the deutsche mark, its five-mark bill from the fourth series bearing, on its front, the benign face and shoulders of the writer Bettina von Arnim. On cotton polyvinyl paper, in ocher and green intaglio, this banknote is the concrete aggregate of the German tendency toward stability and traditional procedures. Adjacent to the portrait of this humane countess, an important space has been left blank, save for that note’s serial number, for the signature of the note’s guarantor—Bundesbank president Schlesinger. Your fluid, gothic signature would replace his in this blank space, Hans, but only briefly. Why? As with the eastern mark, it was to be your task as Bundesbank president to consign the above-mentioned store of prosperity and stability to history!

Before I speak of the euro and before I give an account of this period of your career, I must divorce myself from the spectator’s role and address directly the unvaried and incompetent writing that it was your lot to endure at this time. The word that characterizes much of today’s lifestyle is zapping. Nowhere is this term more applicable than in discussing the conduct of the profession of financial journalism, whose members seem consistently disinclined to properly digest information, but instead listlessly zap through it in search of an eye-catching headline. They believe that everything must be “human” for the man on the street, and they think themselves uniquely prescient when they can zap to the man behind the policy. Rather than studying and explaining the sometimes technical background of central banking, it is easier for them to produce a crude caricature of you as the “gray gnome of Markopolis” or, because of your Christian motivation, the “Archbishop of Frankfurt.” But by far the most puerile, most flatulent description that I have read is “Mr. Ping-Pong” because of your triumph in the championship of Westphalia in your youth. Verbal excesses of this kind, though an almost universal fault, do great violence to a subtle and delicate understanding of monetary policy on the part of the general public. The lazy copy that these hacks turn in is like a flyswatter that always misses the fly, but they are far from the worst. Taking advantage of the debased tenor of public discourse on such matters, a certain former politician, from the comfort and sanctuary of retirement, published articles accusing you of being the European Economic and Monetary Union’s greatest enemy, of being an anti-European desperately holding on to power at the Bundesbank.

Selectively, this underhand pamphleteer seized on the fact that you had characterized the European Monetary Union as a “challenge,” neglecting to mention that in the same breath you had also described it as an “opportunity.” But quite unlike this heavy smoker, plunging ahead has never been your way of undertaking a serious enterprise. It is precisely because the proposed new currency was so unprecedented that you brought to bear—on behalf of Germans, yes, but also on behalf of all Europeans*—the coolest consideration and the most delicate foresight, so that the result would not be dissolution, a great destruction of wealth, and shame. Plain fathers like this former federal chancellor might well feel unquestioning admiration in the presence of a son who is set to exceed them. But is it not also a father’s duty to ensure that this same son is of good character and has inner strength—once standing alone in the world—to properly realize the dreams of his youth? To ask whether all of the participants in the new currency want the same things, for better or for worse, and are truly ready to prosper and suffer together?† What better way to do this than to ensure that the new currency would be as strong and credible as the deutsche mark? To insist that the European Central Bank possess the same independence and prerogative of inflation targeting as the Bundesbank? These are not the actions of an anti-European; they are the actions of a responsible one!

Away from impatient attentions of journalists and politicians, the operation of a central bank is no great mystery, Hans. By regulating the money supply, it provides stable, no, undilutable currency—the basis for the credit that commercial banks supply—whose circulation, far from being a mere aspect of the economy, is the economy: the invisible lifeblood whose frictionless ebb and flow makes all economies work. But I will allow posterity to be the judge of the efforts and solicitude you devoted to giving this grand project a solid basis. As the leaves began to fall from the trees in Frankfurt, and with the euro already enjoying early, modest success, you made your way toward the next goal in your career, the city of Basel and the position of vice chairman of the Bank for International Settlements; and yet, as I write this, Hans, in the back of my mind lurks a fatal doubt. This is not rebellion, I am not of a sudden against you, but in it there is—how shall I say?—an element of withdrawal, a coolness—I am not putting this accurately, but approximately—a resistance or a kind of counterpressure against the direction of my impressions so far.

In the cold light of recent economic events, commercial banks there seem inclined, rather, not inclined toward the Common Good, or the worthy purpose for banking I have outlined above, or prosperity through stability, but inclined rather toward intoxication and irresponsibility, inclined in fact to an innocent and fierce belief that they are favorites of the higher powers who could make up their own rules; inclined toward an exceptionalism that has unleashed something elemental, heavy, mighty, an irresistible concentration of procreative and murderous force.

Such an uneven match of force and wit! One would have to be dull indeed not to feel the atmosphere that lies over all in the aftermath of the crisis in the markets, at once oppressive and expectant. With artless, credulous national governments standing by as if rooted to the spot, it fell to your most recent employer’s Basel Committee on Banking Supervision to try to prevent a recurrence. Press release, call for submissions, position paper, draft, directive, working paper, response, consultative report, amendment, press release. Under the Basel III agreement reached in 2010, the minimum that all banks must keep in reserve has been raised [=GREATER RESILIENCE TO STRESS]; the minimum requirement for common equity, the highest form of loss absorbing capital, will be raised from the current 2% level to a minimum of 7% in eight years’ time. [WHERE DID I READ THIS CONTESTED? MINIMUM EQUITY / CAPITAL SHOULD BE DOUBLE THIS].

I feel sure in advance, along the lines I have been speaking of, that there will be no further need for you now, Hans. You played your part and you should not apologize. But what of those who caused the crisis? To be sure, after all that has happened, they have repressed any sign of shame, or else had no need to, since their hearts are cold and empty of anything except for class pride. But it is not them with whom I am concerned, or only approximately so. More and more the invisible force seems at one with the wrecking before, without systematic foe now, charged only with its own destruction. After a brief attack of reason, the German government is seeking to dilute the weight and seriousness of the standards of the Basel agreement by pushing the European Commission to ignore what has been agreed to there and to recognize silent capital as part of a bank’s common equity. [SILENT (HYBRID) CAPITAL = EQUITY + DEBT, SUSPECT/WORTHLESS IN CRISIS.] Without silent capital, Germany’s morose banking system would implode.

From where the strange forgetfulness, the air of persecution, in which the memories of the crisis have become less hateful than the fear that financial markets might be eviscerated? But no more, let us not look back, there is no originality in that. Let us forget the market failures, the wars, the low interest rates that caused the huge trade imbalances between creditor and debtor nations. Let us forget the huge and disproportionate pool of capital-chasing, income-generating investments that was the result. There is little to be gained in providing a circumstantial account of subprime mortgages, of how banks, enthralled by their high interest rates, packaged hundreds or thousands of them together as bonds, nor the epidemic of predatory lending that the clamor for these bonds unleashed. Let us not dwell on the worthless mathematical models that were used to assess the riskiness of these bonds, nor the prostration of the ratings agencies as they awarded them AAA status. Forget the basic underlying reality of the crisis: that poor people, who for the most part had lied to get their loans, and who struggled to pay back their mortgages, had miraculously provided the basis for the world’s most secure financial products. Let us forget the banks who encouraged clients to invest in these mortgage bonds while at the same time betting on the imminent collapse of the housing market. Let us forget that when the loans made to subprime borrowers dried up, these bets were packaged together and sold as yet more bonds. Forget the panic when housing market crashed.‡ Forget the fantastic handouts to banks from governments—not on the basis that the banks were too big to fail because of their social and economic relevance, but because of the sheer number of side bets that had been placed on their failure. Forget the result of this side-betting: 1) an inability to assess what the exposure of individual banks actually was; 2) an evaporation of trust between banks; 3) banks ceasing to do business with each other. Let us forget the effect of this credit freeze on the real economy, how the ensuing recession caused lower tax receipts and higher nondiscretionary welfare spending. Let us ignore that these factors, combined with the bailouts, caused ballooning budget deficit. Let us ignore the corresponding link between the issues of the solvency of banks and the crisis in the Eurozone.

Envy, retribution, reason, or self-sacrifice will not prevail; only what is tangible can be destroyed or bridled. It is only by faith in the intangible that instants of extreme danger can be transcended, and it is only by transcendence that the greatest possible closeness and commingling can reestablish completely the wordless primordial condition. Your life belongs to you, Hans, and good is to live it.


* I am no longer sure of this.

† This is more complicated now.