3 ms·
Running deficits is not the same as inflation. There's no place for Germans to save, and its because the German government won't borrow. A sensible policy wou
by QuesnayJr 7y ago
Running deficits is not the same as inflation. There's no place for Germans to save, and its because the German government won't borrow. A sensible policy would be for the German government to borrow and invest heavily in infrastructure. Instead Germany has opted for policies that will cause it to teeter on the edge of recession for decades.
- conanbatt 7y ago> A sensible policy would be for the German government to borrow and invest heavily in infrastructure. Or reduce taxation and make everyone but government richer.
- QuesnayJr 7y agoThat would also work.
- dx034 7y agoThere are places for Germans to save but they really dislike investments or any type of risk. Sure, Germany could borrow more and issue bonds but I doubt this would change yields for those bonds so much that investing in them is worth it for retail investors. The demand by institutional investors (insurances, pension funds) easily outweigh retail demand. Also, how would Germany invest in infrastructure if order books at construction companies are filled 1-2 years in advance? If anything, they'd fuel inflation and price out private investment.
- QuesnayJr 7y agoGermans have three choices -- either they invest in risky assets, they increase deficit spending to increase the supply of safe assets, or they accept permanently low interest rates and hoard euros.