Jesus, this comment sounds so bitter. You’re complaining that the average person in Germany wants to save money and be fiscally responsible? Coming from my viewpoint (in the US), we could definitely use more of that.
Why though? The article is specifically about private savings.
The great thing is that negative rates are self-correcting. While the story mentions the German finance ministry is considering making it impossible for banks from passing on the negative rates to depositors, so clearly they're going to try literally everything to keep the delusion going, eventually after putting their banks at risk and realizing the negative rates aren't going away they'll figure out they need to actually spend on a national level.
I cannot believe that we are this far through this discussion, with 80+ points and 120+ comments and not one person has mentioned the underlying cause that is deeper than the "german culture of savings".
None of them had any kids.
Their birthrate is well below replacement.[1] You can't produce an inflationary environment when households aren't being established and the major, overriding driver of consumption has been removed from the lives of so many Germans.
There is a reason they have all this money to save ...
[1] https://en.wikipedia.org/wiki/Demographics_of_Germany "The total fertility rate was rated at 1.57 in 2017." (vs. a replacement rate of 2.1 ...)
As we speak there are millions of people wanting (hell, willing to pay hundreds of euros to smugglers) to be European consumers, younger than the Euro average (I don't have hard numbers on this, but I would be real money), but they are driven away and left for dead in dinghyes.
There's more than one way to grow the population.
Ideally there'd be enough political will to finish the EU project, but that's even more of a long shot than Germany seeing the light on fiscal spending. Then there'd be actual transfer payments between rich and poor EU members, but barring that, Germany and the other rich EU members need to spend.
All the single Germans should probably start taking more vacations in Greece and Spain and the rich ones should buy some Ferraris.
USDA figures [1] put the costs of having a child at 12% to 24% of household income (for richer and poorer families respectively) while some UK estimates [2] have put it as high as 38%
Of course a childless couple can build savings like crazy, if they've got as much income as their peers who are parents, but their outgoings are that much lower!
[1] https://en.wikipedia.org/wiki/Cost_of_raising_a_child#Dual-P... [2] https://www.lv.com/about-us/press/cost-of-a-child-2016
Germany could give every German with a child a stipend to subsidize families (and if they're already doing that, increase the amount they get per child). I don't actually think that would make more Germans have children, but the ones that have families would be able to spend more.
1. "Elterngeld" (parental leave money): After a child is born, parents can take up to 14 months off and the state pays a portion of their last salary (70% afaik). Employers are required by law to accommodate parents who wish to take parental leave.
2. A few years ago, a "right to child daycare" is introduced. If you're working and want to give your child into daycare, the municipality has to offer you a place in their daycare facilities or, if they don't have enough, compensate you for lost income.
(This isn't to say that you don't have to pay for that daycare, but "free child daycare" is now a popular slogan among many political parties and some states have already implemented it afaik.)
3. Not a policy, but there is ongoing pressure from society on employers to improve the work-life balance of parents. Things like making it easier to both men and women to work part-time after a child is born etc. It's still a problem that women are low-key discriminated against, as in "We cannot promote her into an important role. What if she has a child?", and the gender pay gap is still significant, and fathers doing parental work are still looked at funny sometimes, but it's all getting better. (Frustratingly slowly.)
That requires some proof. The German public loves to save, the German state doesn't. The German public hates bailouts with tax money, the German state loves them. Germany isn't a good example for "individual interests form policy".
> Even the leftist parties in Germany don't drift far from this orthodoxy.
Why would they, leftist parties love generous state spending and high debt. The somewhat surprising part in Germany is that the conservatives love spending and hate saving, too.
People are willing to pay money for the privilege of lending money to the German government. Yet the German government, including the supposedly left-wing SPD, is still holding to the schwarze Null ("black zero," meaning a balanced budget). A rational policy in this environment would be to take advantage of negative interest rates to finance stimulus. Instead, they're dogmatically holding to the zero-deficit policy.
As for the SPD being left-wing: traditional political categories quickly break down when applied to Germany, the continuum is "far left, nothing, nothing, the super majority in the center, nothing, nothing, far right". There's very little actual difference between the "conservative" CDU, "social democrat" SPD, the socially progressive Green party and the "free markets will take care of that, whatever it is" FDP when it comes down to policies, which is also why Germany's policies don't change a lot when the government changes (the conservatives removed the military draft, the social democrats cut back the social system, and the pacifist Greens & social democrats went to war in Kosovo).
> A rational policy in this environment would be to take advantage of negative interest rates to finance stimulus.
In a time of growth, record tax income, strong-ish inflation (thank god for cellphones and smart tvs or it would shoot up like crazy)?
Taxes on income, yes. Taxes on spending, yes. Taxes on capital gains, not really. And taxes on property are virtually nonexistent. And where's that financial transaction tax people were talking about 10 years ago?
The share of tax revenue they provide isn't that large, it's about as much as car tax. Even if they doubled it, it wouldn't really matter. Property taxes do exist, but they aren't a federal issue, they (together with a tax on company earnings) fund the local communities, the federal level is funded by income tax and sales tax, mostly.
> And where's that financial transaction tax people were talking about 10 years ago?
It was mostly activists talking about it in a "if we all got together and did this world wide, it would be so nice" kind of way. I don't see that happening any time soon.
Germany is on the verge of recession. Growth was negative last quarter. Inflation is around 1%, which is rather low.
Unless the state is expecting bond rates to remain negative indefinitely.
Government budgets might not be the same as household budgets but you can’t borrow endlessly.
The countries in the Eurozone don't own the Euro: for all effects is a foreign currency. Their finances work like a household.
States or nations that are not doing has well economically deserve respect and help or we should stop calling ourselves a Union.
It's much more difficult when you then ask Germany what to do about a country like Greece, where years of spending and a recession left the government with more debt than it could bear. "just save money" probably wasn't the best response, but it's not like "just take on massive debt to fix your economy" was an option either (it would have been an option if Greece had taken on less debt in better years).