5 ms·

I don't think the ECB is trying to change anything fundamental. It is merely acting within its mandate to keep inflation from falling too far below 2%. That is

I don't think the ECB is trying to change anything fundamental. It is merely acting within its mandate to keep inflation from falling too far below 2%. That is what democratically elected politicians told it to do. Inflation forecasts are far below target: https://www.ecb.europa.eu/stats/ecb_surveys/survey_of_professional_forecasters/html/table_hist_hicp.en.html https://www.ecb.europa.eu/stats/ecb_surveys/survey_of_profes... It's not the ECB that is being unreasonable here. It's Germany. Why on earth would you run a balanced budget while getting paid for borrowing? That is just irrational beyond belief. Fiscal policy is a national matter. It is Germans who need to have that debate you're talking about without constantly blaming the ECB for their own failings.

luckylion 7y ago
> Why on earth would you run a balanced budget while getting paid for borrowing? You still need to pay the money back after you invested it. If those investments don't make a profit, you're in trouble. I mean, they could park it in ... maybe bonds? Oh wait.. ;) There also no telling what the future brings. Borrowing to the limit while times are good leaves you no room when times are bad. A recession is on the horizon, it sounds foolish to shoot your powder before it hits.
- fauigerzigerk 7y ago
  >Borrowing to the limit while times are good leaves you no room when times are bad Times are bad. Germany is very likely in a recession right now and they have fallen back technologically. Now is the time to spend some money and it was never cheaper.
  - majewsky 7y ago
    Exactly. And if we don't spend it on a proper Energiewende and to fix our crumbling infrastructure, we will pay it back 20-fold in a few decades.
  - luckylion 7y ago
    Times are starting to look bad ... but that's my point: don't burn all your wood on the first day of winter when you'll likely still have months ahead.
    - dragonwriter 7y ago
      > don't burn all your wood on the first day of winter when you'll likely still have months ahead. The analogy doesn't hold since burning wood doesn't help shorten winter.
    - fauigerzigerk 7y ago
      Don't forget that recessions have a self-reinforcing, psychological element that winters don't have. Money spent earlier may have a significant multiplier effect. Also, I think spending money is too slow anyway, especially if it is spent on infrastructure, technology development, retooling an obsolete auto and energy sector, etc. In my view, they are already very very late.
    - wbl 7y ago
      Germany has enormous borrowing capacity especially in a recession. Governments are not households.
- QuesnayJr 7y ago
  It's not like Germans are squirrels piling up acorns for the winter. They are keeping gigantic amounts of money in cash, cash that nobody wants. When the crash hits, they didn't do anything useful to prepare for it.
  - luckylion 7y ago
    > It's not like Germans are squirrels piling up acorns for the winter. It's exactly like that. They save not because "omg saving is so cool", they save for rainy days. Germans value predictability and security over short term consumption, though that is changing slowly.
    - QuesnayJr 7y ago
      They didn't do that at all. Did they stockpile food, or gasoline? Did they build extra houses, or cars, or infrastructure. They did not. They put money in the bank. Money by itself doesn't do anything. It has to be invested, and right now the risk-free investments have negative interest rates. It's hard for individuals to save the way squirrels do. Farmers could do it, but that's it. Now it requires governments, and Germans elected a government that refused to do it, and instead imposed balanced budgets instead. Now they are suffering the consequences of that.
- shshehe 7y ago
  If times are good we wouldn't be talking about negative rates what an insipid thing to write
Paradigma11 7y ago
"Why on earth would you run a balanced budget while getting paid for borrowing?" Because later you will have to refinance your debt on worse terms.

luckylion 7y ago

> Why on earth would you run a balanced budget while getting paid for borrowing? You still need to pay the money back after you invested it. If those investments don't make a profit, you're in trouble. I mean, they could park it in ... maybe bonds? Oh wait.. ;) There also no telling what the future brings. Borrowing to the limit while times are good leaves you no room when times are bad. A recession is on the horizon, it sounds foolish to shoot your powder before it hits.

fauigerzigerk 7y ago
>Borrowing to the limit while times are good leaves you no room when times are bad Times are bad. Germany is very likely in a recession right now and they have fallen back technologically. Now is the time to spend some money and it was never cheaper.
- majewsky 7y ago
  Exactly. And if we don't spend it on a proper Energiewende and to fix our crumbling infrastructure, we will pay it back 20-fold in a few decades.
- luckylion 7y ago
  Times are starting to look bad ... but that's my point: don't burn all your wood on the first day of winter when you'll likely still have months ahead.
  - dragonwriter 7y ago
    > don't burn all your wood on the first day of winter when you'll likely still have months ahead. The analogy doesn't hold since burning wood doesn't help shorten winter.
  - fauigerzigerk 7y ago
    Don't forget that recessions have a self-reinforcing, psychological element that winters don't have. Money spent earlier may have a significant multiplier effect. Also, I think spending money is too slow anyway, especially if it is spent on infrastructure, technology development, retooling an obsolete auto and energy sector, etc. In my view, they are already very very late.
  - wbl 7y ago
    Germany has enormous borrowing capacity especially in a recession. Governments are not households.
QuesnayJr 7y ago
It's not like Germans are squirrels piling up acorns for the winter. They are keeping gigantic amounts of money in cash, cash that nobody wants. When the crash hits, they didn't do anything useful to prepare for it.
- luckylion 7y ago
  > It's not like Germans are squirrels piling up acorns for the winter. It's exactly like that. They save not because "omg saving is so cool", they save for rainy days. Germans value predictability and security over short term consumption, though that is changing slowly.
  - QuesnayJr 7y ago
    They didn't do that at all. Did they stockpile food, or gasoline? Did they build extra houses, or cars, or infrastructure. They did not. They put money in the bank. Money by itself doesn't do anything. It has to be invested, and right now the risk-free investments have negative interest rates. It's hard for individuals to save the way squirrels do. Farmers could do it, but that's it. Now it requires governments, and Germans elected a government that refused to do it, and instead imposed balanced budgets instead. Now they are suffering the consequences of that.
shshehe 7y ago
If times are good we wouldn't be talking about negative rates what an insipid thing to write

Paradigma11 7y ago

"Why on earth would you run a balanced budget while getting paid for borrowing?" Because later you will have to refinance your debt on worse terms.