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Those limits exist for the same reason the US can't just spend as much money as we want it to -- the threat of runaway inflation. If one member state spends "to

by uoaei 6y ago

Those limits exist for the same reason the US can't just spend as much money as we want it to -- the threat of runaway inflation. If one member state spends "too much" (i.e., injects "too much" money into circulation), it challenges and threatens the economic capacity of other member states because it devalues the Euro because the Euro is less scarce than it was. And there are no "EU taxes," only taxes paid to each member state separately. So controlling the monetary policy, and particularly the amount of money in circulation, is a little more complex than would be expected in a homogenous economy. So tolerances for "errant" behavior are a little tighter. But I wouldn't call those limits "tight" in the grand scheme of things. It's a bit like telling people to stay home during the pandemic -- most people will do it faithfully so that the few that act out can be accounted for and will have a smaller impact than if no controls were in place. We should note that the economy before the pandemic started is very differently managed to the one after. The economy was relatively predictable compared to today, so the tolerances shrunk somewhat to reflect that. You will note that the EU lifted those limits at the start of the pandemic and have come together to redefine a short- and medium-term policy to account for the circumstances.

xyzzyz 6y ago
> If one member state spends "too much" (i.e., injects "too much" money into circulation), it challenges and threatens the economic capacity of other member states because it devalues the Euro because the Euro is less scarce than it was. This would make sense if only Eurozone members were part of the Stability and Growth pact, but as it turns out, other EU countries like Sweden or Poland, which neither are part of nor intend to join Eurozone any time soon, are also subject to these very same debt limit obligations stemming from the pact. Poland in fact has its own debt limit written into its national constitution.
- uoaei 6y ago
  They participate in much the same economy, however, so money flows even across currency lines must be managed. It is like trade agreements anywhere else, but internalized into the EU's bureaucratic infrastructure.

by uoaei 6y ago

xyzzyz 6y ago

> If one member state spends "too much" (i.e., injects "too much" money into circulation), it challenges and threatens the economic capacity of other member states because it devalues the Euro because the Euro is less scarce than it was. This would make sense if only Eurozone members were part of the Stability and Growth pact, but as it turns out, other EU countries like Sweden or Poland, which neither are part of nor intend to join Eurozone any time soon, are also subject to these very same debt limit obligations stemming from the pact. Poland in fact has its own debt limit written into its national constitution.

uoaei 6y ago
They participate in much the same economy, however, so money flows even across currency lines must be managed. It is like trade agreements anywhere else, but internalized into the EU's bureaucratic infrastructure.