Münchhausen's Heirs

I. Why Essay IX Concealed the Present

The attentive reader will have noticed: My essay on "The Birth of Industry from the Destructive Spirit of War" ended in a strange timelessness. I spoke of DARPA and SPRIND, of Krupp and World War II, of the German paradox — but I was silent about February 27, 2022.

That was intentional.

I wanted to conjure up once more that world in which we had settled: a world in which Germany believed it could atone for its past through pacifism. A world in which arms exports were a dirty business that no one talked about. A world in which mechanical engineering was proud to build machine tools, not weapons.

That world no longer exists.

II. February 27, 2022

It was a Sunday. Three days earlier, Russian troops had invaded Ukraine. The Bundestag convened for a special session — that alone was unprecedented. And then Olaf Scholz, 81 days in office, spoke that sentence which will go down in history:

"We are experiencing a turning point. And that means: The world afterward is no longer the same as the world before." — Chancellor Olaf Scholz, February 27, 2022

What followed was the largest rearmament announcement in the history of the Federal Republic: 100 billion euros special fund for the Bundeswehr. Overnight. Without significant debate. Written into the constitution with a two-thirds majority.

The stock market understood immediately. Rheinmetall, for years a boring stock at the bottom of the MDAX, became a high-flyer. A twenty-four-fold increase in three years. In March 2023, the stock rose to the DAX. In February 2025, it broke through the 1,000-euro mark.

This is not a stock market. This is a referendum on war.

III. The Return of the Triad

In my previous essay, I spoke of the unholy alliance between Mars and Mercury — between the god of war and the god of commerce. But the dyad was incomplete. The third is missing: Hephaestus.

Hephaestus is the god of smithcraft and invention. He is the only manual laborer among the Olympian gods. He created the bronze giant Talos — the first robot in mythology — who was to protect the island of Crete. He forged the thunderbolts of Zeus, the trident of Poseidon, the armor of Achilles.

But Hephaestus is also an outsider. He was born lame, thrown from Olympus by his mother Hera because he was ugly. He works not in the shining halls of the gods, but in a workshop under the volcano. He creates wonders, but he doesn't belong.

Doesn't that sound familiar? The inventor who doesn't fit into the system. The machine builder who loves precision, but is only called by the powerful when they need his tools. The weed in the cracks.

And now they're calling for Hephaestus again.

IV. The Converts

It's not just Rheinmetall. The real story of the turning point is playing out in the Mittelstand.

Bosch, the company that for decades refused on principle to work with the defense industry, now announces: "We want to make our contribution and are currently looking closely at the possibilities."

Trumpf, the Swabian laser specialist, whose Christian-influenced owner family Leibinger excludes arms deals in the articles of association, hints at a "turning point" in the company. Peter Leibinger, chairman of the supervisory board and co-owner, said at the Munich Security Conference:

"We in business must also reevaluate our necessary contribution to a defensible democracy and thereby internally affirm the value of defense capability and the necessary goods." — Peter Leibinger, Munich Security Conference 2024

"Internally affirm" — that is the language of conversion. It is the language of people who give up their convictions and seek moral justification for it.

Rheinmetall CEO Armin Papperger describes what he needs from mechanical engineering: "For our weapons system production, we need, among other things, modern CNC machines." The arms boom captures the entire supply chain. Vincorion, a supplier for armored vehicles, is increasing its workforce by 20 percent. Continental, ZF, Mahle — automotive suppliers that are cutting jobs — are in talks with weapons manufacturers to take over skilled workers.

It's as if the entire German industry is laying down its tools and pilgrimaging to the weapons forge.

V. The Special Fund, or: Debts Are Now Called Assets

But who pays for all this?

In the German Empire, the answer was clear: the defeated enemy. The war indemnity of 1871 — five billion gold francs that France had to pay after the defeat — nourished the illusion that war was a business. They invested in the fleet, in the armies, and in the end the opponent would pay the bill.

In the Third Reich, the answer was even more brutal: plunder. Rearmament from 1933 was financed on credit, with the explicit expectation that the defeated countries would be looted. Which then happened: forced laborers, looted gold, expropriated industries. The war economy ate its way through Europe.

And today? Today no one asks the question.

"Special fund" — the word is a masterpiece of Orwellian language. It sounds like treasure, like something you have. In truth, it's debt. Debt that was enshrined in the constitution to circumvent the debt brake. The trick: You call debts "assets" and write them into the constitution.

The old Bundestag passed the constitutional amendment on March 18, 2025 — a few days before the newly elected Bundestag convened. 512 deputies voted yes. Union, SPD, and Greens. A parliamentary hussar ride to prevent a possible blockade.

Friedrich Merz, who had said just a week earlier "It is ruled out for the foreseeable future that we will reform the debt brake," had de facto abolished it.

"The Bundesbank expects the state deficit to grow from the current 2.5 to 4.8 percent by 2028. That would be nearly doubling within just two years." — Bundesbank Monthly Report, December 2025

But the decisive question remains unasked: Who pays this back?

In the German Empire, the answer was: France. In the Third Reich: the defeated peoples. Today, people only talk about Russian reparations to Ukraine. That's a different topic. The question of who finances German rearmament — who pays back the trillion euros — is not asked.

The answer would be terrifying after all: We ourselves. Our children. Our grandchildren.

Because armaments are consumptive, not productive. A tank creates no added value. It rusts, it becomes obsolete, it must be replaced. An artillery shell that is fired is consumed. A drone that crashes is gone. Armament is not an investment in the economic sense — it's consumption. Expensive consumption financed on credit.

The ifo Institute found that the government misappropriates every second euro from the "special funds" — not for defense or infrastructure, but to plug acute budget holes. The debts are real. The benefit is questionable.

VI. The Moral Volte-Face

Most remarkable is the speed of moral adjustment.

As recently as 2021, defense was a stigma in Germany. Banks refused to finance defense companies. ESG criteria categorically excluded weapons manufacturers. Investment funds advertised having "clean" portfolios without defense stocks. Anyone who worked at Rheinmetall or Heckler & Koch preferred to keep quiet about it at parties.

Today people talk about "defense capability." About "defensible democracy." About "security investments." The language has changed — and with it, the conscience.

IG Metall, which at its union congress in 2023 still passed resolutions on defense conversion — meaning converting from defense to civilian production — published shortly afterward a paper titled "Industrial Policy Guidelines for a Future-Proof Security and Defense Industry." Together with the SPD Economic Forum. And the Federal Association of the German Security and Defense Industry.

Conversion was yesterday. Today, rearmament is industrial policy.

BDI President Siegfried Russwurm put it this way at the Munich Security Conference 2024: "The harsh reality of the turning point has not yet arrived in people's heads — and certainly not in their actions." He called for reconsidering the separation of military and civilian research.

Abolish the separation. That sounds harmless. It means: The entire German innovation landscape is to be opened up for armaments. Universities, Fraunhofer Institutes, startups — all should "make their contribution."

VII. Failed Twice

The first time was the German Empire. The naval armament under Tirpitz, the dreadnought race with Great Britain, Krupp's weapons forges — they created jobs and prosperity. And they led straight into World War I.

The second time was the Third Reich. Rearmament from 1933 ended mass unemployment. Krupp employed more than 200,000 people in 1939. The economy boomed. And it led straight into World War II, the Holocaust, and total destruction.

Now they're trying it a third time.

Of course, circumstances are different. Of course, Putin is an aggressor. Of course, Europe must be defensible. All of that is true.

But the question no one asks is this: What happens to all the newly built capacities when the Bundeswehr's needs are met? What happens to the 440 companies that have converted to defense? What happens to the workers who switched from Continental to Rheinmetall?

The defense industry is not a faucet that can be turned on and off. It creates dependencies, interests, lobbies. It creates people whose jobs depend on war — or at least on the fear of war.

And it creates an economy that needs war to survive.

VIII. Germany as Prey

But there's another question no one asks. A more uncomfortable one.

Countries without natural resources ultimately pay their debts with land and resources. Germany has no resources. The coal is exhausted, the oil was never there, the rare earths lie elsewhere. What remains?

Innovation capability — but we've documented that in the previous essays: systematically dismantled through mediocre excellence, through bell wire instead of fiber optic, through BOFIS in the control centers.

So what remains for a country that takes on a trillion euros in debt without ever being able to pay it back?

In both scenarios, the same question arises: Who sits at the cash register? Certainly no longer a German.

And here lies the historical irony: Germany twice tried to plunder others. German Empire, Third Reich. Failed both times, paid for with millions of dead. And now, the third time, Germany itself becomes the prey.

Not through tanks. Through bonds.

IX. Münchhausen and His Hair

Baron Münchhausen, as he told it himself, once got stuck with his horse in a swamp. The water rose, the horse sank, the situation was hopeless. Then he grabbed his own pigtail and pulled himself and the horse out of the swamp.

Everyone knows that doesn't work. Physics forbids it. You can't pull yourself up.

Friedrich Merz is trying exactly that. He wants to pull the German state out of the structural swamp — with debt. Debt that he himself takes on. Debt that finances the same structures that created the swamp in the first place.

And Münchhausen rode on a cannonball. That fits too.

The CDU/CSU, the SPD, the Greens — they have all managed, deepened, cemented the structural swamp for decades. The same parties, the same structures, often the same people. And now they want us to believe they are the solution?