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Let's also call out the origins (at least partly) for this mess. Which is the obsession with a balanced budget, mainly originating with former finance minister
by cycomanic 4y ago
Let's also call out the origins (at least partly) for this mess. Which is the obsession with a balanced budget, mainly originating with former finance minister Schäuble. The last 20 years of extremely low interest rates would have been ideal to use essentially free money (government bonds were typically below inflation) to build German infrastructure. Instead Schäuble used weird anologies to your neighbor who should not spend over their budget (the German expression is Milchmädchenrechnung) to convince people that taking out loans is a bad thing for governments. Such a lost opportunity, Germany could be so much further along in their transition to renewables, could have one of the best public transport systems in the world and that essentially and no cost for the loaning the money. Instead it has a dependence on Russian gas, destroyed renewables industry (which used to be World leading), and public transport infrastructure which is desperate for investment just when we are coming into a recession.
- imtringued 4y agoThis reminds me how a lot of value is actually collectively created and corporations are just there to efficiently make use of government provided infrastructure. Some people got this idea that private individuals create all the value but if that were true everyone would be self employed. A debt brake basically means less gov bonds which means the same money is bidding up fewer bonds. The idea behind this is that private lending will pick up because of the lower interest rate, the irony of course is that due to the zero lower bound, there is no real point behind lower interest rates.