IN BERLIN the “Golden Twenties” have long been remembered, nostalgically, as a time of cultural and political regeneration. But today Germany's capital dreams the dreams of that decade particuarly vividly. The city's current reputation for creativity, diversity and nightlife mean that the comparisons are as endless as they are inevitable. People are drawn to Berlin now just as W.H. Auden, Bertolt Brecht, and George Grosz were then.

“Dancing on the Volcano”, an absorbing exhibition inspired by a 1938 film of the same name, further extends the flattering parallels. Both periods are seen as a kaleidoscopic mix of rise and decline, misery and luxury, light and darkness. To illustrate these themes, the exhibition mingles consumer goods and vintage clothes with paintings, drawings, posters, photographs and sculptures—around 500 pieces from 200 artists.

The exhibition bears witness to the darker side of the "Golden Twenties”: mass unemployment, squalid housing, and poverty that afflicted tens of thousands of Germans. George Grosz depicted war invalids and the evils of capitalism in his satirical caricatures “God With Us” and “The Robbers”. Hans Baluschek’s watercolour “The Emigrants” (1924) depicts a father, a mother feeding her baby, and a son clutching a little wooden toy horse sitting on their modest belongings at a railway station.

This image is a striking reflection of the photograph that has transformed the debate on today's migration crisis in Europe. It is easy to imagine the family of Aylan Kurdi, the boy shown drowned on a Turkish beach after fleeing Syria, as that family huddling before a desperate journey. Only today's Berlin is at the other end of the story: welcoming rather than producing refugees.

But how deep is Berlin's transformation? The biggest protests have been outside the capital, in poor towns of the former East Germany. But Pegida, Germany's anti-immigrant movement, has made ripples in the capital, if not waves. And in another echo of the 1920s, inequality is on many lips. Zalando, an online fashion shop that organises Berlin's Bred and Butter fashion show and is a pin-up example of Berlin's tech startup scene, cancelled its winter event at former Tempelhof airport. The reason they gave was that two of the aircraft hangars may soon be used as a temporary housing for asylum seekers. “We can’t have a party side by side with traumatised refugees,” a spokesperson confessed.

Whatever the creative ferment of the 1920s, today's Berlin is a far more enticing prospect. By 1929, over 6m Germans were unemployed; few days ago Angela Merkel announced her intention to welcome around 800,000 refugees into the country, a decision that many analysts still hope, even after the turmoil over the weekend, will redress modern Germany's labour shortages and aging workforce. Politically, Ms Merkel's unflappable style is as different from the hyperventilating demagogues who destroyed the Weimar Republic as it is possible to be. By exposing both the positive and destructive forces at work in the 1920s, "Dancing on the Volcano" reminds Germans of past mistakes.

Tanz auf dem Vulkan—Berlin of the Twenties as Reflected in the Arts, is on at theStadtmuseum Berlin (Ephraim Palais) until January 31st 2016