(Published July 2020)
"Politicians are trying to save yesterday's world with artificially created central bank money - and are missing out on the future." Gabor Steingart (4)
In the course of the Corona crisis, all economic rules are being thrown overboard in Brussels, chaired by the German Chancellor, and all past experience, according to which inflation must follow a money glut, is being declared invalid.
Already Isaac Newton (1642-1727) held the opinion as royal mintmaster:
"If the amount of currency in circulation doubles, but everything else remains the same, then prices double.
"The "post-factual economics" and the "Modern Monetary Theory" (MMT) of today, he - as a strictly logical thinking scientist - could hardly have understood[i].
And Ludwig Erhard (1897-1977), the father of the "social market economy," warned in vain on March 21, 1962:
"There is still time, but it is high time to exercise reflection and escape from delusion. As if it could be possible for a people to want to consume more than the same people can or are willing to produce in real values."
Those who do badly in the EU are now entitled to help! These are z. Sometimes they are awarded uncontrolled and without the pressure to carry out necessary reforms. Only incorrigible optimists believe that economically weak countries such as Greece, Italy or Spain will ever repay their (interest-free) debts.
Resolved Corona Aids:
Originally EUR 750 billion, of which 250 billion as a loan and 500 billion as a gift.
Objection of the "thrifty four": Denmark, Netherlands, Austria, Sweden, later supplemented by Finland.
In backroom talks, a solution was found through corruption:
Discount per year for:
Denmark 1,069 million) together
The Netherlands 300 million) 1,797 million
Austria 428 million) per year
Decision:
It remains at 750 billion, of which 390 billion as a loan (for 2021-27), so "only" 360 billion instead of 500 billion donated.
Add to this the record EU budget 2021-27 of EUR 1,100 billion over 7 years.
Hopefully, the additional payment feared by some will not also be necessary.
The EU Parliament has yet to give its approval. Will it have the courage to demand more than just cosmetic repairs?
For comparison:
Federal budget 2019 (in EUR): 326.4 billion
Gross domestic product (GDP) FRG 2019: 3,440 billion
Public debt of the FRG: over 2,000 billion[2]
The promised 750 billion is well over twice (230 %) the 2019 federal budget, or well over one-fifth (21%) of Germany's 2019 gross domestic product.
The 360 billion gift is still significantly more than the 2019 federal budget.
Hopefully our friends and partners in the EU are not of the opinion that the Germans will already pay everything!
Germany can, according to politicians and pro-government media, do everything at the same time: take in asylum seekers, intercept the Corona crisis, pull through the energy transition as a model for the rest of the world, save the euro and the EU!
At the Introduction of the euro and even afterwards, assurances were given again and again that there would be no joint liability, debt or transfer union.
"The euro will be as stable as the deutschmark".
promised the namesake of the euro, Finance Minister Theo Waigelwho was responsible for the negotiations on the introduction of monetary union.
After not even 20 years of Euro, all this is forgotten!
Now the EU Commission can take out loans for which there is still no counter-financing. It remains to be seen how far the planned new taxes will suffice. (In 2021, a plastic tax will be introduced on non-recyclable plastic. By 2023 at the latest, a digital tax and a CO2-border tax to follow).
The big winner is France, which has been striving for debt union since the introduction of the euro, and especially the over-indebted southern countries.
How the Euro loses value shows on the Gold price (per fine ounce):
At the introduction of the euro in 2001: approx. 390 euros
July 2020: approx. 1,600 euros
Economists like Günter Hannich have predicted this gold price explosion due to the misconstrued Euro (and Dollar). (At http://www.spieltheorie.de/euro-soziales-dilemma/ Christian Rieck shows simply and clearly why the EURO cannot work).
A few Figures on the financial situation of some major EU countries:
(Without Great Britain, which is practically no longer in the EU).
Public debt In % of 2019 GDP (should be below 60%):
Denmark: 35.3
Germany: 63.9
Finland: 61.3
France: 98.5
Greece: 181.8
Italy: 131.8
Netherlands: 49.1
Austria 78.6
Poland: 50.6
Portugal: 125.7
Sweden 40.8
Spain: 98.4 (laenderdateien.de)
France, Greece, Italy, Portugal and Spain are over-indebted and await aid. By their own efforts, they can hardly make a sufficient contribution to the restructuring of their countries. Urgently needed reforms are refused for domestic political reasons - as long as others (especially Germany) are expected to plug the budget holes!
Assets per capita 2019 in US$ of a
Danes: 58,748
Germans: 35,313
Finns 55,532
French: 101,942
Greeks: 40,000
Italians: 91,889
Dutch; 31,057
Austrians: 94,070
Poland; 22,600
Portuguese: 44,025
Sweden: 41,582
Spaniards: 95,360 (https.en.wikipedia.org).
So much for the "rich" Germany constantly invoked in the press and in politics!
According to the media, the wealth of Germans consists largely of claims to insurance, social benefits and other government assistance. Which hopefully can still be paid in a few years.
Why does Germany have to support the wealthier French, Greeks, Italians, Portuguese and Spaniards? Presumably so that they do not have to declare national bankruptcy and exit the euro.
Average-Income (GDP : inhabitants) per year in EUR:
Denmark: 56,490
Germany: 43,341
Finland: 44,288
France 37,874
Greece: 18,151
Italy: 30,782
Netherlands: 47,521
Austria: 45,824
Poland: 13,577
Portugal: 20,616
Sweden 49,879
Spain: 27,146 (www.laenderdaten.info. average income worldwide).
Social benefits as a percentage of GDP 2018:
Denmark: 28.0
Germany: 25.1
Finland 28.7
France: 31.2
Greece: 23.5
Italy: 27.9
Netherlands: 16.7
Austria: 26.6
Poland: 21.1
Portugal: 22.6
Sweden: 26.1
Spain: 23.7 (www.OECD.org.sozialleistungen as a percentage of GDP).
The European Union still lacks a common foreign, economic and defense policy. For the euro zone in particular, the harmonization of working hours, laws, retirement age, social benefits, taxes, etc. is long overdue. After all, a common currency requires equal economic conditions.
Therefore, comparisons between individual states are difficult.
Z. For example, according to our press, southerners must own more homes and thus have greater wealth because rents are too high. They also put money aside for times of need because the state does not help as well as in Germany.
Since the Germans are the largest country in terms of population and have one of the higher (not the highest) incomes, they should pay the most!
Conclusion:
The creeping transition from a market economy to a state-controlled (socialist?) mismanagement has begun throughout Europe. Reforms and investments in the future are missing or are being postponed. The EU will fall behind economically on a global scale. Our children and grandchildren will have to bear the consequences of this policy.
In the Federal Republic of Germany, we are familiar with the Länder fiscal equalization system, which allowed the city-state of Berlin, for example, to forego reforms and stick to its mismanagement and poor administration.
Now, corresponding compensation payments are to be made throughout Europe. Even "Der Spiegel" sees it that way, which of course must welcome this cut in the European financial order in a "politically correct" way:
"But de facto, the first step toward a fiscal union has been taken. With an EU Commission that becomes the treasury and is allowed to levy its own digital taxes and other charges. After all, the bonds have to be repaid somehow.
It is a taboo break that was urgently needed. It is not acceptable for individual countries in a union to shirk their responsibility and leave the rescue of the continent to the central banks."
("Der Spiegel," No. 31, 2020, page 8.)
Political propaganda and the government-owned media are pulling out all the stops to make the Brussels decisions palatable to us and to present the associated new taxes as "without alternative. Citizens may grumble, but for now they will pay dutifully.
Politicians believe they are buying time, but are gambling away the future and endangering democracy.
Can this development still be stopped?
Or do we go with eyes wide open the way into the (socialist) state economy propagated by the Left-Greens, which has so far still regularly ended in ruin!
Supplements 2020/23:
In the Federal Republic of Germany, too, money is being squandered frivolously through the Corona aid program, probably especially in view of the coming election year:
"Germany is not becoming modern and not digital, just poor." (Gabor Steingart in "The Morning Briefing," 11/11/2020.)
Similarly, the ECB their PEPP bond purchase program (Pandemic Emergency Purchase Program) until the end of March 2022 and expands the Bond purchases around more 500 billion euro. The Governing Council's decision increases the volume of bond purchases to 1.85 trillion That is 5 times the size of the 2019 federal budget. (Gabor Steingart in the "Morning Briefing" of 11. 12. 20).
"This System change from the social market economy of the 70s, 80s and 90s on Asian-style intervention capitalism is the most silent system change the West has ever experienced. We don't have to celebrate this shift in coordinates from the market to the state, but we should recognize it."
(Gabor Steingart in the "Morning Briefing" of 3. 5. 2021).
EU Social Spending in International Comparison:
Shares of the EU according to "The Pioneer Capital Briefing" of 2.5. 21:
In the world population: approx. 6 %
In world gross national product: approx. 15 %
To global social spending: approx. 50%
The process already initiated under Angela Merkel Germany's Democratic Self-Destructionwhich is being dramatically accelerated by the Ukraine war and the energy crisis, is denounced by Gabor Steingart in seven exemplary points: "Do-it-yourself: how to ruin a state". His conclusion: "We don't need Putin for this fun dismantling., none Xi Jinping and Anton Hofreiter's heavy weapons certainly not. The Mecklenburg philosopher and prophet Angela Merkel had always believed in our powers of self-destruction: We can do it!"
(The Pioneer Briefing, 11/2/2022).
Recently, in our government, the "Free beer economy" popular, which wants to appease voters with all kinds of gifts (gasoline rebate, 9-euro ticket, gas price brake, 49-euro ticket and other "reliefs"). Where is the horrified outcry of the market economists?
Clear words on this from Hans Werner Sinn can be found in the Pioneer Briefing of 19. 11. 2022 under "What we are doing here is hara-kiri".
In the meantime (2023), the Ukraine war and the inflation of Western currencies have made things even worse than feared. The EURO has become a Soft currency and the politicians of the EU see in the galloping inflation a way to reduce their national debt while increasing tax revenues.
Now (May 2023), politicians in Europe and the USA have apparently lost all sense of proportion and are opening the way to a ruinous debt policy, as shown in "The Pioneer Briefing" of May 12, 2023: "Government Finances: Welcome to Fantasyland."
(You can also read the article on the subject under “Book Reviews”:The global disaster ", under "Remembrance days" the contribution "Surrender" to May 8, 2005, under "Okology" the article "What apocalypse is coming?" and the post "Everything was better before" under “Economy and Social Affairs”).
Sources:
(1) Focus-online, 21. 7. 2020.
(2) Spaet news, 7/22/2020.
(3) Internet/Eurostat/EU Commission/OEC.
(4) "A Dangerous Time Game," The Pioneer, "Beyond the Obvious," dated 7/28/2020.
(5) Gabor Steingart, "The Inconvenient Truth," Penguin, 2020.
(6) Hans Werner Sinn, "Die wundersame Geldvermehrung," Herder, 2021.
Endnotes:
[i] Nicolaus Copernicus (1473-1543) came up with another monetary theory: "If bad money is accepted as legal tender, good money will be driven out of circulation."
The only "good money" today is gold or other precious metals!
As the banker J. P Morgan (1837-1913) said: "Only gold is money, everything else is credit."
[2] The total debt of the federal government, states, municipalities, etc. was EUR 2,252 trillion (2,252,000 billion) or EUR 27,090 per capita on 6/20/2021. (Federal Statistical Office).
And in March 2023, it was 2,406 trillion, or about 28,600 per capita (The Pioneer Briefing, 9/4/2023),
