My daughter came back from Kindergarten and mentioned this word to me. She said it means dumme Gans and dictionary says differently. Can someone give a few simple examples where it is used?
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A "Petze" is a colloquial word that describes someone who "rats out" someone else.
Dict.cc translates it as "telltale" or "snitch". In German, the noun "Petze" or the verb "petzen/verpetzen" are mostly used by children, because it is a more childlike way to say "verraten" (betray).
An exemplary use of the word in Kindergarden or school would be that a child did something bad and the "Petze" tells the teacher.
If used by an adult, it is mostly meant either jokingly, or to express that the act of telling on someone was childish. For example, if a co-worker notices a minor mistake made by someone and tells on him to his superior (like going to the teacher), others could call him a "Petze".
This is a colloquial term coming from student's jargon by the end of the 18th Century. It is mainly used by and for children who denounce others to parents or teachers. Such a child would then be called Petze.
Some believe that it has its origin in Rotwelsch where petzen, pezetten was used for reporting somebody to the police. Alternatively it may also come from the noun Petze, which was used for a female dog in southern regions of Germany.
A nice kids rhyme against snitching: