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The author is the President of the Bundestag as well as a former German finance minister
“Eventually we all died,” wrote John Maynard Keynes 98 years ago. He believes that short-term financial intervention is essential in times of crisis for economic prosperity to flourish. New promotional programs, inclusive EU epidemic recovery package, is in line with this custom. I was a lover from the beginning – surprising some people.
During my time as German minister of finance, I had turbulent history as a point. However, as here, my goal was stability: borrowing in a time of crisis for financial stability to last, as long as the question of repayment is not forgotten. The need to repay the loan is often overlooked. Many governments focus on the “simple” measures of Keynesianism – borrowing – and then delaying repaying their debts. This leads to the development of large debts. Soon, the economic downturn is spreading. Keynes saw this as a major threat, in reference to its potential to “shake the already existing foundations of humanity”.
Economic prices are under pressure in many parts of the world, including the EU. Here, more than any other, the financial principles of paying off debt it has money. Revenue from the euro has risen sharply, without being fully equated with the volume of goods and services. This promotes anticipation of lowering of companies and other households. In this way, the eurozone puts at risk the exchange rate that can be divided.
Already a consumer price more than European Central Bank policy “below but about 2%”. Central bank depositors are not the only ones with alarms. Keynesian economists such as Larry Summers or Olivier Blanchard are worried about crossing the red lines on government debt and increasing the potential for further economic growth. In real estate, divisions and arts, the risk is already at an all-time high. Property prices rose last year by 6.3%. In fact, the rate of quarterly growth is also doubled. A major economic component in which the ECB appears to be invested in market or commodity markets and feeds foam.
This is not just a financial problem. It also creates dangers in chat rooms. Most international lenders are wealthy people and organizations. Public lending increases their wealth, widening the gap between rich and poor. True warned once that those who benefit will be hated. Now the distinction between “haves” and “have-nots” poses a serious threat to the unity of the parties.
We need to get back to economic and financial. The weight of public debt should be reduced. Otherwise, there is a risk that the Covid-19 epidemic will be followed by a “debt crisis”, with economic problems in Europe. With their age, EU countries will struggle to join the US and China in employment and competition if they allow more debt disrupting their economic fluctuations. Therefore, all members of the euro must strive to return to a strong budget bondage.
Experience shows that appropriate budgets in high-debt countries are not possible without pressure from the outside world. Apart from themselves, the members of the treaty could be tempted to take on debt that could hurt the community. I have discussed this “moral decay” with Mario Draghi several times. We have agreed that, in accordance with the structure of the European Union, competition and economic stability will be the responsibility of member states.
I believe he wants to follow this principle as Prime Minister of Italy. It is important about Italy and the rest of the EU. Otherwise we will need a European agency that has the power to enforce compliance laws. This may require a change of contract. However, even without such changes, the European Commission is becoming increasingly important in the region.
A reliable alternative to Brussels would be a eurozone debt repayment agreement, similar to the profits made by Robert Walpole and Alexander Hamilton. As the first Secretary of the Treasury, Mr. Hamilton pressured the new United States in 1792 to pay better fines, adjust its budget and reduce its debt. This was the theme of the frequently mentioned “Hamilton minutes”, not the sharing of debt that sometimes inspires the EU.
The loan repayment plan worked and can work today. They offer a mix of “carrots and sticks” as they are followed by the IMF – another legacy of the Keynes. I hope that Europe will be wise enough to follow the British economist in this regard.
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