The supporters of a very expansive financial policy in politics, the media and the academic world have to be very brave: The idea of ​​high government borrowing to finance projects that are supposed to dampen the consequences of climate change and promote infrastructure will probably not work.

This finding applies both to the financial policy of a future traffic light coalition and to future financial policy in Europe.

And that's just as well.

Gerald Braunberger

Editor.

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Because the benevolent politician, who creates benefits for the citizens with the help of as much money as possible, is just as much a fiction of the social democratic 1970s as the well-meaning social planner from theoretical models of economists, who today again obscures the heads of those economists who would like to be a political doer - or at least an advisor to the doer. Anyone who draws their supposedly modern illusionism from the 1970s should also consult the powerful opposing position from that time.

In their book “Democracy in Deficit” James M. Buchanan (who later received the Nobel Memorial Prize for Economics) and Richard E. Wagner showed why it is in the self-interest of politicians and their advisors to systematically spend more money than the state in tax revenue. A systematic increase in indebtedness, however, deprives states of their financial leeway in the long term, increases the risk of national bankruptcy and can induce central banks to allow more inflation than is good for the stability of the price level in order to alleviate the hardships of highly indebted states. History is replete with examples of the economic, political and social misery caused by state over-indebtedness.

Now, there is no question that Germany is on the verge of national bankruptcy. But a look at the European Union is enough to identify countries where the question of over-indebtedness could well arise as soon as the European Central Bank stops buying bonds. Since the outbreak of the pandemic, Italy's new debt has been more or less fully guaranteed by the ECB. The argument put forward like a mantra by some economists that states could tolerate higher debts because of the low interest rates neglects the question of who buys and holds the bonds of these states if the central banks should no longer be available. It is precisely from highly indebted countries that the desire for a relaxation of the European debt rules is formulated with particular urgency.

Anyone who realizes that the financial stability of the European house, in view of the oppressive indebtedness of other European countries, depends to a large extent on Germany's still impeccable creditworthiness, should really make sure that Germany does not take over too.