I have been hearing inklings of this from the Alt-Right sphere. Are they on to something?
Definitely.
Adolf Hitler was gay as a goose stepper. The Joel Gray character from "Cabaret" was actually based on Adolf.
The German Empire, under the Kaisers was a prudish place, but what would you expect from a nation of German Lutherans. Pornography was illegal and nudity on stage was forbidden. This is kind of strange in light of the German appreciation of naturalism, which is to say, running around naked, out of doors.
When the Empire ceased to exist and the survivors had to come up with some kind of government, things like public morality, were low on the list. As with any time of public upheaval, sin is profitable, and suppression of vice is neglected. There's nothing strange about burlesque shows that seem to have no moral limits, prostitution, and all the other deadly sins, appearing.
The period of the Wiemar Republic was a time when German people were still trying to figure out what the hell happened.
Look at it from their point of view. Germany was never invaded by a foreign army. There was no great battle lost. Through out the war, the Germans did fairly well. How did they end up the losers?
When looking for reasons for failure, moral turpitude is always a good one. Who is going to defend it? If the alt-right is interested in the moral degeneration of Wiemar, they've probably been reading old Nazi pamphlets, telling how the Jews have destroyed the moral fiber of Germany, and that's why they lost.