By last week I was ready for Madoff. I'd read J.K. Galbraith's reissued 1950s classic The Great Crash 1929 and taken delivery of his point that, in boom times, the rate of embezzlement grows because the promised rewards (Nicola Horlick, please note) don't seem as absurd as they actually are, and the rate of discovery falls off.

There is, as Galbraith noted, a strange period between commission and revelation, when the embezzler is richer yet the victim feels no poorer, so that, in this time, there is “a net increase in psychic wealth”. It's often only when depression knocks and money gets tight that Wile E. Coyote realises that he has run out of road and sees the abyss beneath him.

So history does teach lessons, even if often we don't know which to learn. It helps, however, to get the facts straight. Several times since the German Finance Minister, Peer Steinbrück, described the idea of a stimulus package along British lines as “crass”, I have heard this aversion to fiscal profligacy ascribed to the role that hyperinflation played in the rise of the Nazis. If so, it is misplaced.

What Hitler benefited from was the consequences of the Wall Street crash, with US credit disappearing alongside markets for German goods. And what did the Weimar equivalent of Mr Steinbrück do? He stuck to sound money and fiscal rectitude, raised taxes and cut spending. Dole queues lengthened. And the Government relented just in time to give the incoming Nazis a boost.

With the stakes quite so high, it is easy to become irritated at the petty politicisation in Britain of the German objection. When Mr Steinbrück, the Social Democrat Finance Minister in the Christian Democrat Angela Merkel's grand coalition, expressed scorn last week for the EU stimulus plan, his words were greeted with something like rapture by the Conservatives and their supporters. “Look,” they said, “we're not isolated! Germany is on our side!” Back came Labour with the politically ad hominem attack that Mr Steinbrück was speaking merely for a domestic audience. Then a relative CDU nonentity named Steffen Kampeter agreed with Mr Steinbrück, and detonated a new set of Tory orgasms.

Fun though it is to watch those who are most likely to have called a German a Hun, and who have spent the past two decades desperately trying to share as little as possible with Fritz, suddenly lionising the Boche, it is beside the point - which has to be, who is right, the mega- stimulators (Gordon Brown) or the steady-as-she-goes brigade (Mr Steinbrück)?

After 1929 the Great Crash was followed by the Great Depression. By 1932 almost a quarter of working-age Americans were unemployed. President Hoover had havered between some stimulus and sound finance, and faced a re-election fight against a Democrat, Franklin Roosevelt, who promised a balanced budget. Hoover lost, Roosevelt arrived, tore up conventional wisdom, and commenced the New Deal, a huge experiment in government intervention, that many credit with ending the Depression.

If Germans are scarred by hyperinflation, albeit for the wrong reasons, progressive Americans are terrified of depression. This might explain the tone of the Nobel prize-winning economist Paul Krugman's immediate response to Mr Steinbruck in his New York Times blog, entitled “The economic consequences of Herr Steinbrueck” (the Americans seem not to have access to an umlaut). “The world economy”, Professor Krugman wrote, “is in a terrifying nosedive, visible everywhere,” and yet here was Mr Steinbrück “standing firm” against the necessary, but complicated, co-ordinated EU policy of extraordinary stimulus. Because of the nature of the EU economy, Germany could effectively scupper the policies of the other nations, and this would “add significantly to the severity of the global downturn”.

Although at first sight this may seem a disagreement about the remedy, it soon becomes apparent that what we have is a disagreement about the problem. Professor Krugman believes that we are in a terrifying nosedive. Mr Steinbrück says: “I tend to be sceptical because it is human nature to see the crisis as even worse than it is. I don't want to downplay anything; 2009 looks like it will be a very difficult year. But we are not about to collapse.”

A very difficult year? I hope so. Just as I hope that this analysis is not partly created by German pique. “After being told by Brussels to bring our deficit under control, we are now being told by Brussels to spend more,” one government economics adviser was quoted as saying.

“After years of lecturing us on how we need to share in the gains of uncontrolled financial markets, the Labour politicians can't now expect us to share in its losses,” said Mr Kampeter, illogically. “The switch from decades of supply-side politics all the way to a crass Keynesianism is breathtaking,” Mr Steinbrück said.

You can see his point, for Mr Brown is now in the odd position of playing Roosevelt to his own Hoover. But if Mr Krugman is right, Mr Brown is merely doing what is necessary under changed circumstances. The idea of some Germans that they will be insulated by their rectitude from the winds blowing across the globe is itself crass - 40 per cent of Germany's income depends upon exports. If the rest of us all hunker down, lose jobs and go (as econo-masochists want) cold turkey, who do they imagine will buy German goods? BMW, nein danke - kein Geld.

It is only a few months since Berliners gave Barack Obama the Beatles treatment. In five weeks time the President-elect will announce the grandaddy of all stimulus programmes. Even the McCain adviser, Professor Kenneth Rogoff, has been arguing for a stimulus of no less than $500 billion to $600 billion, “to counter what is going to be a collapse in consumption”.

In September UK unemployment rose by 140,000 to 1.82 million. That was long before the full effects of the crisis began to be felt. It will be two million by the spring and, without a big and co-ordinated stimulus, Lord alone knows how many Britons could find themselves out of work with all the moral and social consequences of which David Cameron gave warning last week. Now we face the possibility of a global depression.

Roosevelt's plan was contradictory and experimental, perhaps in part because it dealt with a depression already under way, while we may still be able to avoid one. And all such endeavours are a shot in the dark, in which no one can be sure they're right. But at least the Yank point of view is based on a real reading of history. As someone said last week: “Dealing with an unprecedented crisis is a puzzle, a trial-and-error. Honestly, I don't know.”

That, too, was Peer Steinbrück. But not knowing is no kind of policy.

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