It isn't paper that the world is borrowing from Germany; its the labor of Germans.
If the rest of the world stops subsidizing credit and balanced their budgets, the principle effect will be a decline in interest rates in Germany. And Germans will find it more reasonable to consume more or start new companies at home.
Its not a problem. Germany wins either way.
And those that keep consuming more than they produce will continue to lose, just as individuals do that behave unwisely.
(There were people who benefited from the economic growth - I count myself among them - but that doesn't invalidate the argument regarding the whole work force)
The net lender countries didn't experience the same wage growth. But they didn't see their currencies inflate either. Except for those otherwise soundly managed countries that for some reason share a currency with a bunch of poorly managed countries. These countries got the stable wages and the privilege of subsidizing their partners.
The comparision between private households and state households is invalid. That's on of the main errors of Neo capitalism. What is wise for individuals is dumb for states.
Because states households are circuits. They press and rotate money. The money they spend comes back partially.
Private individuals households are linear they receive and spend money. The money they spend is lost forever for them.
Money spent by government comes back as tax income by stimulated economic growth.
You're ignoring the fact that said money was stimulating economic growth before govt took it.
Govt spending is not stimulating. Stimulating spending is stimulating, regardless of who does it. Unstimulating spending is unstimulation, regardless of who does it.
The difference between private spending and public spending is that private spending is usually an attempt to make money while public spending is a combination of keeping govt employees happy and buying votes. (Yes, the two are related.)
Private investors are much more likely to earn a return on an investment. Which means they can keep re-investing it.
Yes, you get all the "stimulating" effect without destroying wealth. Of course, its been that way wherever societies become wealthy.
And government handles all of the "investments" wherever societies become poor.
Of course, the answer is whenever the group becomes large enough so that people lose track of who's taking what.
Government likes to make waves on the pond, point out the highs and distract you from the lows and how much disruption is created.
When the group is small, its a lot easier to identify someone that's just splashing around and claiming to create value.
The motivation of trade is simply comparative advantage. Trade is beneficial regardless of whether the products being traded have equal value.
If other nations became more productive, the German current account surplus would shrink and the global productivity level, by implication, would be higher than now. My argument rests on a simple assumption: Higher productivity equals greater wealth. This can of course be questioned on a philosophical level, but not on the basis of mainstream economics.
I don't, but I believe someone has to buy this production or increased productivity doesn't help anyone.
Your assumption sounds correct, but isn't the base of Germany's economic growth in the last years: Germany didn't increase productivity (at least not by a significant margin), but decreased wages (compared with it's neighbors). And this decreased wealth.
I don't deny at all that there are many short term effects and flucuations that have nothing to do with productivity. But we're talking about the different speeds of European economies and those different speeds correlate very well with different levels of productivity.
And look at the Greek stock market. The biggest non financial companies there are a Coke bottling company and the lottery. The biggest German listed company (I believe) is Siemens, which makes high tech industrial equipment like power plants or health care equipment. The Chinese want that. They need energy, they don't want to play in the Greek lottery and they can bottle their own Coke. That's the reason for the two speed economy.
I agree with your argument -- IIUC you're invoking comparative advantage. But the two concepts above are fundamentally different. Wealth is a stock, while productivity is a flow multiplier (e.g. A(t) in Solow model: http://en.wikipedia.org/wiki/Solow_residual). Saying "equals" is a bit adventurous, IMHO. Probably a bit pedantic, but then you do stress that that statement is on the basis of "mainstream economics".