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Low interest rates: The German saver is one of the winners

2019-08-09T14:28:19.770Z

The Germans would be expropriated by the low interest rates, it is said. But that's not true: we benefit from ECB monetary policy like almost no other EU country.


It seems like a popular wisdom in our heads that the small German saver is expropriated by the low interest rates and the evil monetary policy of the European Central Bank (ECB). He receives nothing more interest on his laboriously saved, so must save even more. And yet he does not have a sufficient pension income in old age. This expropriation leads to misery and poverty in old age and punishes the Germans for his virtuous behavior. Worse still, monetary policy increases inequality, as it hits the weak and helps the rich - that's the perception.

But is the myth of the saver victim of monetary policy and low interest rates?

The critics of ECB monetary policy are unimpressed by the fact that 40 percent of adult Germans have no significant assets at all. Almost nowhere in the developed economies is there such a high proportion of people who do not save and therefore do not pursue private retirement provision. It may be that many also save little or no because we have a strong social state. This ensures good coverage, at least in comparison to most other western countries.

Most, however, can not save because low wages and the taxes and dues to pay make them spend all their disposable income on daily living. These people do not really care if the interest rates are zero percent or ten percent. If you have nothing saved you can not benefit from interest.

The prices are stable

It is strange that many politicians and media see the Germans reflexively and first and foremost as savers when it comes to monetary policy. The Germans are not only savers, but much more still working people and thus dependent on a secure labor market. Low interest rates have made monetary policy a decisive factor in enabling companies to expand and thus hire and employ people.

Thus, in recent years, many million jobs in Europe and Germany have been created by the expansionary ECB monetary policy. The good economic development of Germany, which is also due to ECB monetary policy, has led to wage increases in almost all income groups in Germany. Many Germans are also parents or grandparents who want their children and grandchildren to find worthwhile work in ten or twenty years' time.

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Every German is a consumer who wants to be sure that, in the future, his basic needs can be met by income. ECB monetary policy has played a crucial role in keeping the euro stable and, thus, keeping prices stable for consumers.

Many Germans are taxpayers. Those who complain about low interest rates, like to ignore that this saves the German state every year 45 billion euros by lower interest expenditure. This relieves the German taxpayer and has allowed the state to significantly increase social spending in the last decade. The abolition of the solis, which costs just under ten billion euros a year, would not be possible without the low interest rates.

Source: zeit

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