Uhm, sorry, but is the author serious?
I mean, how did we come to the point where not being indebted is bad and should be condemned?
I mean, how did we come to the point where not being indebted is bad and should be condemned?
Now the solution is clearly more debt?
Maybe also do some research on the internet infrastructure in Germany. It's a cartel. That's why service is so bad.
I'm not saying I'm against good infrastructure investments. But just telling us to "keep spending" because "debt is cheap" won't cut it.
Not the same but similar. Look at Argentina and Greek to see what happens if countries overspend. Germany is one of the forerunners against climate change without going in too much dept.
So what nations are facing low unemployment, and what nations are facing resource shortages?
We don't automatically take what every non-mainstream economic theory says as gospel. You need a bit more reason for us to accept this one than "MMT says so".
If the state does not go into debt and the industry doesn't do it then there are only a) the other countries or b) your own citizens.
Just ask yourself - who lends a country money?
So it is considered good for a country to go into debt if it uses the money for infrastructure. With this money people and companies get paid and thus produce GDP. With this GDP growth the debt can be paid.
But this would be in a perfect world.
I dont agree. The debt still has to be paid back with interest, and the infrastructure will require maintenance (costs) in the future. If a country or municipality is debt free they can build new with excess revenue. If not, there is little hope of getting the budget under control by borrowing to create more obligations.
There is an obvious catch, but this uncritical "debt is baaad" rationale does not stand.
That's true but kinda also not true. There has to be the possibility that the debt is to be paid back. More important: the interests have to be payed. Rest is cashflow management.
Hypothetically more infrastructure would mean more taxes and so one. Like in SimCity.
Just think of it this way: where does the money comes from that the state makes? If it is not spend the state has all the money but no one else.
It's more like activa and pasica on a balance sheet
That's what debt is for - short term improvement for longer term gain. The notion of continually refinancing debt only serves the lenders.
Aren't the lenders your citizens? You would argue that they are the big banks. Ok but who works there? Your citizens? And yes the pay taxes.
Who do the banks lend money to? Companies and citizens who in turn create tax revenue.
You don't run the state like a company. Where would your profit come from?
You are applying newton's physics to the solar system. It works approximately good - but some things are odd and won't fit until you have a big problem and everything unhinges
Second, I second Krugman's conclusion that rebus sic stantibus, Germany should borrow more (very cheaply) and invest more (for example, in fixing the shamefully neglected infrastructure). This a fairly specific statement, tied to a place and time.
(I'm in the US, so maybe my standards are too low...)
It doesn't work if every country does it. In order for some countries to export more than they import (resulting in savings invested abroad), other countries need to import more than they export and pay for it by satisfying international demand for investments.
So, on the one side you have counties like Japan and Germany and on the other you have the US.
The demand for savings is apparently what drives this. People need to invest their savings somewhere. If "safe" investments aren't available, financial markets will somehow invent them. This may or may not actually be safe or productive.
Interesting theory, but I wonder when the German economy was so strong that Germany forced the rest of Europe to agree to the Euro:
When the first plans for an economic and monetary union within the EEC were brought up in 1969?
Or in 1979, when European currencies were pegged against the ECU, stabilizing exchange rates (and taking large parts of monetary policy out of the member states' hands)?
Maybe in 1989 when France made German reunification depend on Germany committing to the monetary union?
It has been running for about 20 years, becoming the world's second most traded currency after the dollar and without it Europe would still be a mixed bag of national currencies rather than being one of the big three economic powers.
If the euro is totally economically unsound, then I must say that it is doing rather well considering.
Personally, I store all my wealth in a 3 ton rai stone sunk in deep water 60 km NNW off the isle of Yap. There are some limits on fungibility, but the transaction security is excellent.
Seriously, this doesn't work.
Money has had a value until 2008. Then somehow the rules were rewritten and now you are getting penalized for saving so you can later invest. This doesn't make any sense.
What's next? Prohibit ownership of precious metals (again)?
Sure, but all that doesn't come out for free (and it isn't even cheap), as you pay taxes on your income.
Once it is in your pocket the money is "free" from the costs that have been already detracted from it for all the general government costs.
And besides once you have your income, you can spend it (and thus give to the government some more taxes, i.e. VAT or Mehrwersteuer) or save part of it, investing it (and BTW paying some more taxes on the interests or dividends your investments - hopefully - produce).
No, the government doesn't provide me with the financial tools to preserve my wealth. The market wants to do that, because there's demand for it. It's the government that indirectly manipulates interest rates and thereby distorts the market so that it isn't capable anymore of providing these services.
It seems as if all is nice and cozy from your viewpoint with this situation as long as I spend my currency (immediately!) to "help the system". But nobody asks whether this allocates my resources towards the right investment.
When the time comes and I cannot retire, because I wasn't able to save, it's now again the problem of society that needs to step in, and you will probably opt for even more debt to "sustain" my standard of living.
Again, this financial/political ideology is severely damaging our prospects as a society. I wonder how it's so hard to understand.
We do. That is how money is created and we tend to print a bit too much because not having enough restricts ability to trade. Inflation is essentially the money we printed and it turns out we didn't need.
Under current conditions, though, he could in fact be right. But there are two problems with government borrowing. First, while there may be very good things to spend the money on, instead the spending decisions are going to be made by Congress, politically rather than economically. That's a recipe for a bunch of wasteful spending, with perhaps some good things done as well, but the good things are almost a result of chance.
Second, Congress may be right to decide to spend money now, but the time comes when it is no longer time to borrow and spend. Will Congress stop when it's time to stop? History does not lead to optimism here.
This time may in fact be different. But it's different a lot less often than people say it is, especially people who say "it's different" in order to throw away rules that keep them from doing what they want.
They also cannot, the ECB decides on monetary policy with the Euro, not Germany or Germany's Bundesbank (which, if they were, also weren't directly taking orders from the federal government regarding monetary policy).
That's not really surprising though is it: https://en.wikipedia.org/wiki/Hyperinflation_in_the_Weimar_R...