Nazism and Jewish persecution awareness during the WW2 years

Before Hitler came to power, Germany was the Western European nation where Jews were most integrated. Recall that Hitler was born an Austrian not a German and that anti-Semitism was most virulent in Austria. Hitler and his goons, of course, undid all that and added his own bloody chapter to world history.

This is a large topic where you cannot expect a single accepted answer or point of view: I don't know if by now historians even agree on when reliable information about mass killings reached the German public for the first time.

However, one quote from Heike B. Gortemaker's Eva Braun: Life with Hitler (referring to some time in 1940) staid firmly in my mind, perhaps because it points so strongly towards the banality of evil (if that's even the right term):

[The assassination of Jews] was never discussed openly in the innermost private circle; the topic was never allowed to be mentioned in Hitler’s presence.

Perhaps it is symptomatic for what also went on in larger society. The entire book is also a telling account of layers of deceptions (perhaps including self-deception) around Hitler and his innermost circle at the Berghof, where even Eva Braun's status as his girlfriend was deliberately kept vague.

I recommend the historian Robert Gellately's work "Backing Hitler: Consent and Coercion in Nazi Germany". The essence is that the Germans did know or could have known about persecution and deportation of Jews.

This is an often discussed topic in German history lessons. Often in company with the novel The Wave. I can tell you that there is no single answer to the question, and it definitely was not the German nation focusing just on profit.

Media control

Look at today's media and try to figure out what is really currently happening in the Ukraine. You only see what your country's media is telling you. Watch the Russian media and you will for sure get a completely different image of what is "really" happening.

The regime was no exception here. Many people in Germany actually did not know about the mass-murdering of Jews, because what the media told them what happened to them was something entirely different. There was even a special concentration camp just for the media, where everyone was happily living their happy life (while they actually weren't). Guess which one almost exclusively appeared in the media. And almost all Germans did never travel to any such camps, because why would they?

Revenge

There was a huge dispute between "the Jews" and most other religions (not only in Germany). I.E. greed is considered a sin, which allowed only the Jewish members of the country to operate a bank. People often felt like they were being cheated, which created a general antipathy for Jewish banks and stores.

If people realized later on that Jews were "punished", some of them considered this a well deserved revenge, and media build part of their propaganda on this.

Also after loosing the first world war Germany was forced to admit - against historical facts - that it was the only aggressor in this war and therefore had to pay reparations and endure other humiliating penalties. Many war veterans were still angry about this and welcomed any form of punishment against the "old enemy".

Control

If someone tells you to kill a Jew, you would probably refuse it, and thats a good thing. Now if they threaten you to either kill him/her or your life will end, you might start to have concerns, but probably go the heroic martyr way. Now lets say they won't kill you, but your wife/children/parents if you do not comply, also your friends and friends of your family. At some point you might consider a single life to be much less worse than the lives of your entire family and friends. And if you called them a liar, you found those people dead or mutilated the next day.

This control was further established by having the so called Blockwart. Basically any random neighbor could have been working for the state (and receive benefits for everyone they report). Mention that you don't like the Führer, and next day you loose your job. Question what they do to the Jews in those camps, and your wife is in a camp next day. There was almost no limit in cruelty and creativity when trying to maintain control over the people.

Propaganda

Once can say many things about the regime, but they definitely were brilliant when it came to propaganda. Everything official was planned as well as any political campaign nowadays, just for the entire nation. People were told what they need to hear, they saw what they had to see and they felt - through expert engineering of events - what they had to feel. An entire nation was blinded to what actually happened by a massive machinery called the ministry of propaganda lead by Joseph Goebbels.

There was an awareness, and consequent protests (that were in some ways effective, e.g., from clergy and veterans' organizations), about the T-4 euthanasia program. The extent of it was such that many people assumed that casualties from the Eastern front would be given the T4 treatment. How much additional thinking was needed to perceive that if German soldiers and veterans had been, and were thought to still be, at risk of state-organized murder, that official enemies the Jews were a likely target for things that were worse?

http://en.wikipedia.org/wiki/Action_T4#Opposition

T4 was on an infinitesimal scale compared to the deportation and extermination campaign extended throughout the European theatre and beyond. Tens of thousands of Germans were involved in logistics and support roles for that campaign, apart from the official perpetrators such as SS, Gestapo, soldiers and administrators of the occupation governments. Neither the official nor the unofficial personnel were by any means sealed off from the rest of the population and when they were, it was rarely for the duration of the war. Some had adverse psychological reactions or declined to participate in the more gruesome murders (there was no significant punishment for that) and were reassigned or sent home. Some undoubtedly discussed what was going on with religious confessors, psychiatrists, trusted friends and family, or even the odd Jewish friend that for some reason they might have wanted to warn or save.

The number of Germans who took large risks, such as domestic resistance activity or assisting Jews, or in whatever way undertaking activities that would have been severely punished by the state, must surely be much smaller than the number who took the small risk of progressively sharing information with others. A substantial fraction of the German electorate was against the Nazis before their accession to power, and these people did not all disappear afterward or suddenly become co-opted by anti-Jewish propaganda.

That the "climate" in Greater Germany forbade open discussion and opposition means that communication of facts and rumors was slowed, but it is inconceivable that a necessarily extremely shocking and controversial program such as the far larger and more brutal version of T-4, could have been kept quiet for so many years on such a scale. It is statistically absurd considering the number of people who knew many things, and the amount of opportunity to propagate at least some of the juicy information.

Incidentally, here is what Himmler thought about the state of information of the Nazi party members, as expressed in one of his speeches to the SS and party apparatchiks in the Generalgouvernement (occupied Poland). He seems to have been speaking, at a minimum, of the upper tier 'civilian' party members back home, since a few words later he refers to his audience's familiarity with giant piles of corpses.

I am talking about the evacuation of the Jews, the extermination of the Jewish people[1]. It is one of those things that is easily said. [quickly] "The Jewish people is being exterminated[2]," every Party member will tell you, "perfectly clear, it's part of our plans, we're eliminating the Jews, exterminating[2] them, a small matter". [less quickly] And then along they all come, all the 80 million upright Germans, and each one has his decent Jew. [mockingly] They say: all the others are swine, but here is a first-class Jew.

http://www.nizkor.org/hweb/people/h/himmler-heinrich/posen/oct-04-43/ausrottung-transl-nizkor.html

I've always wondered how is it possible that an entire nation and beyond (Germany) wasn't aware of the Jewish persecution during the WW2 years or, if they were, that they did nothing to stop

At least when it comes to that beyond, it isn't true. The relatives of my friends were fighting in Polish guerilla (AK). At least the partizants were all aware, that people caught in roundups were sent to death camps. How many people were taken away by military conwoys, (and how many of them were Jews) were seen by everyone, so the fact that the extermination is taking place was commonly known.

Disclaimer:
As I was made aware of this by Drux' comments: my answer may lead some people to believe that I am in some way justifying people not intervening, or even actively participating in the Holocaust.
If read the comments below, I hope it is self-evident that this is not the case.
Just to be clear: I absolutely and unequivocally condemn any action that discriminates on the basis of religion and or race, be it in the past, present or future.

My main interest, as far as history is concerned, is 20th century geo-politics. The question of how could this happen is one that we all ask about every genocide. What I tend to do (and attempted to do in my answer) is to shift that question to could this happen (again) today or is it happening again.
Of course, when attempting to apply this very sensitive subject (WWII genocide) to modern-day politics, I recognize the fact that bad choice of words or phrasing can lead to misunderstandings. It also stands to reason that a 1-on-1 "projection" of past events onto the present is, by definition false/flawed. But the cliché of history repeating itself is, IMHO, not all together absurd.

Anyway, it is not my intention to hurt people, I am not trying to negate or minimize any of the atrocities that were committed. My only goal is to communicate what I believe are genuine similarities between the rise of Nazi Germany and today's political tendencies/evolutions.

And to avoid any further misunderstandings, let's not beat around the bush: I have no sympathies towards anything even remotely resembling fascism or (neo-)Nazism whatsoever.
So if you are a neo-Nazi looking to recruit: try your luck at the local asylum, or try reading a book, instead of using it as a hammer.

If the contents of my answer below offends anyone for any reason, do not hesitate to leave a comment, and I'll be happy to clarify whatever needs clarification, or edit my answer in accordingly.

From the off: The phrase "Wir haben es nicht gewusst" is a lie. Many Germans have later admitted that the deportation and mass killing of Jews, Gipsies and political prisoners was a public secret.
At first, it could well be that not everybody was equally aware, and yes, the German economy was headed in the right direction, and yes the Nazi regime did manage to create jobs, and instill on the people a lost sense of pride. So it's not unlikely that, at first, people were willing to subject themselves and others to the nasty sides of the regime.

By the time the ghastly things that were going on had become this public secret, the Nazi apparatus had managed to infiltrate every aspect of daily life, though. There are recorded accounts of children that got sent home from school, and were expressly prohibited to attend classes until they joined the Hitler Jugend.
Though this does not serve as justification, with the rise of fascism, there grew a sense of terror among the population, too: if they didn't contribute, that was seen as a sign of rebellion, and thus they, too, could fall victim. But that's just one of many reasons why the Nazi's could keep on doing what they did, and does not answer your question.
For that, we need to go back to the end of WWI.

Germany had capitulated, and was heavily punished (Treaty of Versailles). WWI was in part caused by the Germans wanting a part of the colonial pie that the rest of Europe were having (among other things of course) as you may know.
While the Treaty of Versailles was said to be about making amends and repaying war damage to those countries involved, it also prohibited Germany to expand its borders (ie: no colonies).
Do not underestimate the social trauma a nation can sustain when, already having had to admit defeat, being forced to forego the perks (colonies back then were seen as a nations right) other countries so happily grant themselves.
A nation is a mass of people, and a mass behaves irrational and emotional (like a toddler). Tell a 3 year old it's done wrong, punish it and then tell it, it has to watch while other toddlers are eating its sweets, it'll cry, kick and scream.

So there was a genuine feeling of betrayal and disgruntlement in Germany. There had also been a long tradition of antisemitism in Europe. Couple that to the rise of Communism (Russian revolution happened during WWI) and you have: Anger, Fear (of Communism) and a not-well-liked minority. That's an explosive mix, no matter how you look at it.
All you need is a spark: a charismatic leader, preferable one that also manages to restore some of the national pride that the country in question seems to have lost.

An interesting read in this respect is "The Nuremberg Diary". Gustave Gilber, an American psychologist interviewed Hermann Göring and wrote their conversation down:

Why, of course, the people don't want war. Why would some poor slob on a farm want to risk his life in a war when the best that he can get out of it is to come back to his farm in one piece? Naturally, the common people don't want war; neither in Russia nor in England nor in America, nor for that matter in Germany. That is understood.

When you speak of WWII and the Holocaust in particular, it stands to reason that the same "rule" applies: the people aren't actively asking for pogroms. But Göring continues:

But, after all, it is the leaders of the country who determine the policy and it is always a simple matter to drag the people along, whether it is a democracy or a fascist dictatorship or a Parliament or a Communist dictatorship.

Leaders are indeed the ones that make out the policies, both domestic and foreign. It is they who stand to gain from conflict. Economic and geopolitical factors come into play, and quickly overtake humanitarian considerations. As far as the leaders of a country are concerned, human casualties become statistics, and are seen as part of the cost vs benefits analysis.
Basically, it's as Joseph Stalin (allegedly) stated:

A single death is a tragedy; a million deaths is a statistic.

All things asside, but in the interest of correctness, this may not be Stalin's quote
How about this one, by Jean Rostand:

Kill one man, and you are a murderer. Kill millions of men, and you are a conqueror. Kill them all, and you are a god.

Back to Göring, though, Gilbert points out a possible flaw in Göring's logic: the fact that a democratic society couldn't possibly elect a gouvernament that institutionalizes the prosecution of certain groups of people:

Gilbert: There is one difference. In a democracy, the people have some say in the matter through their elected representatives, and in the United States only Congress can declare wars.

Göring, however, does not see things like this, and actually summarizes the plot of Orwell's yet to be written novell 1984:

Göring: Oh, that is all well and good, but, voice or no voice, the people can always be brought to the bidding of the leaders. That is easy. All you have to do is tell them they are being attacked and denounce the pacifists for lack of patriotism and exposing the country to danger. It works the same way in any country.

In Germany, the people were brought to the leaders' bidding by first: creating jobs, improving the economy, breaking the Treaty of Versailles and reinstating the sense of National pride.
Targetting Jews and Gipsies was, in a way, self-evident: they could be the scape-goat and play the role of the enemy that has already infiltrated the country. They were seen as the ones that stole the wealth of the German people.

People are worryingly gullible when it comes to things like this as American schoolteacher Jane Elliott's infamous experiment has demonstrated time and time again. Here's a clip

There have been many experiments like this, and all of them seem to come to the same conclusion: When people are put in a situation where they feel they have the right to exercise power over another group, violence ensues, and is even seen as justifiable.
Ironically, a more recent example of this can be seen in Israel, and the way people treat muslim refugees. They aren't even referred to as refugees, but "Infiltrators", in the same way the Jews were seen as the enemy that lived within back in WWII Germany...

Even more worrying, though: this phenomenon is so inherent to human nature, we don't even notice it's going on all around us:
After 9/11, Bill Mahr caught some slack for saying the suicide attackers were not cowards. At the same time, Howard Stern stated that America should choose "any Arab country, they're all harbouring terrorists, and just nuke 'em". Bill Mahr was fired, Howerd Stern wasn't.
Look at the people who have used the quote: "You're either with us, or against us" in various forms here: Lenin (Communist), Mussolini (Fascist), George W Bush (US president), Hillary Clinton (US Foreign Secretary) and Vic Toews (Canadian public safety minister).

Since the Communist and Fascist dictators, the phrase has always been used in a context of threads to national security, mainly terrorism.
This threat is also used to justify mass surveillance, invasive searches in airport security, The patriot act (Christ, patriotism and (extreme) nationalism is in the name), active prosecution of whistle-blowers like Edward Snowden, and racial profiling.

Now think about these things, and read the quote by Göring a second time:

Göring: Oh, that is all well and good, but, voice or no voice, the people can always be brought to the bidding of the leaders. That is easy. All you have to do is tell them they are being attacked and denounce the pacifists for lack of patriotism and exposing the country to danger. It works the same way in any country.

How could something like the Holocaust happen, and could it happen again? I'm afraid to say that I believe it can happen anywhere, and if it were to happen again in our life-time, we wouldn't realize it before it's too late, and even so: few of us would actually have the courage to step up and do something about it.

A couple of books that are loosely related, in the sense that they touch on, or identify similarities between nazi- or communist dictatorships and current western foreign policies:

Gore Vidal: Permanent war for Permanent Peace
William Blum: Rogue State

After a decade of preparing the population for it, I seriously doubt enough Germans were going to protest the wholesale slaughter of Jews.
And even then, the official line always was "relocation" and putting them to work for the greater benefit of Germany. And most Jews indeed were relocated to forced labour camps. Camps in which the conditions were such of course that most didn't survive for long, but especially near the end of the war that wasn't too different from the conditions in which the average German was living.
Which is in fact part of the reason the charges against German administrators of prisoner of war camps didn't include the starving and denial of medical care of their prisoners, those prisoners were not treated significantly worse than the general population, who also suffered a severe lack of medical care and food towards the end.

And yes, I know that view is in some circles deemed "controversial" as it doesn't match with the propaganda induced view that every German in WW2 was a monster who lived in splendor while treating everyone else like rats to be exterminated.

Germany isn't alone in having committed a genocide. Sadly, this is normal human behavior. However, the Shoah is probably is the best documented case, having occurred smack dab in the middle of the most literate society on earth. So what you are asking isn't really a Germany question, but a human behavior question (with Germany as the best of sadly too many good examples).

I have read a book that tries to delve into this phenomenon: James Waller's Becomming Evil: How Ordinary People Commit Genocide and Mass Killing (at the moment, wikipedia claims this is the standard college textbook on the subject). His basic thesis is that under the right circumstances most (not all, but most) ordinary people will quite willingly participate in mass evil of this kind. Passively sure, but even actively, if called upon to do so.

The balance of the book explores what exactly those circumstances are. He developed a model that tries to describe such situations. Its pretty detailed, but I think the important takeaway for the novice is a situation where a group of people are viewed by others as separate, lesser, threatening beings. It "helps" a lot if people are raised from an early age to believe this, but active media propaganda helps a lot too. If I don't view an "Elbonian" as an equal person (or really even a human at all), then suddenly killing them as a solution to a perceived problem with them isn't entirely off the table. If I can convince myself the Elbonians are somehow attacking me, then it would logically follow that attacking them back is not only reasonable, but in fact the proper thing to do.

In Germany's case, you have a country steeped in centuries of anti-semitic culture, along with several years of pervasive state media propaganda telling citizens they and everything they held dear were under direct attack from these sub-human creatures. They responded little differently than people responded in East Timor in 1975, or in Cambodia in 1975, or in Guatemala in 1982, or Rwanda in 1990, or Srebernica in 1995. (First-hand accounts from all of these appear in Waller's book)