Dogma
2022-06-17 12:16:50
- #1
The fundamental problem is not new and has been known for a long time. Of course, QE is a form of state financing, but pretending that only the southern countries benefited from it is ridiculous. German government bonds are still historically cheap, the recent (strong) interest rate increases do not change that. What was withheld from the poor German saver in risk-free interest earnings has not only relieved the state budget for over a decade but practically supported it. We were foolish to cling to the balanced budget in such times. We have a huge backlog of investment and could have tackled so much with so little over the last 10 years.
The question is how to get out of these measures with as little damage as possible. What is your counterproposal? Would we be better off if the southern countries were driven into the wall?
If the ECB lowers interest rates and does QE to save the economy (jobs, etc.), people complain because there are no longer any interest earnings on savings accounts. Then there is inflation, and people complain about that too. Then the ECB does something (tentatively!) against inflation, and people complain again. There is always just complaining.
Of course the bonds are historically cheap. What is annoying is that a double standard is being applied again.
We (the EU) can no longer get out of this without damage; in my opinion, the train has left the station. There was cheap money for too long, and inflation already started when the ECB kept lowering interest rates.
Inflation is not inherently bad, as long as it is moderate, but the fact that the ECB bought government bonds and practically locked away the "promissory note" (and hopes that no one wants them) means simply that too much money entered the system. We now have inflation, will definitely slip into a recession, and if we're really unlucky, the whole thing will turn into a depression and further.