Re: US urges EU to do more to stimulate its economy
At the recent meeting of the G20 US Treasury Secretary Jack Lew led the majority of the industrial world’s finance ministers and central bankers to urge Europe to increase its spending in order to pull the continent out of its economic doldrums. Fortunately for Europe Germany is taking a stand against this Keynesian nonsense. According to the Financial Times, “Any hope of a change of heart in Berlin was dashed before the meeting had even begun, with Wolfgang Schauble, Germany’s finance minister, warning against debt-financed growth.” Germany is the lone country in the EU that has consistently voted against expanding the European Central Bank’s open market operations to mimic the Fed’s quantitative easing programs. The ECB may go ahead with a QE program of some sort anyway, despite the prohibition of such action in its charter. These decisions are made by majority rule, and Germany was outvoted. Germany refuses to increase government spending, but it cannot stop the ever-increasing debasement of the euro by the European Central Bank. One wonders when Germany will decide that enough is enough, cease using the euro, and reinstate the Deutsche Mark. The steady debasement of the euro offsets many of the benefits that Germany derives from controlling its national budget. Primarily it cannot prevent price inflation and the skewing of its economy toward export industries at the expense of the rest of the the country. Germany is a sovereign country and has every right to control its own destiny rather than tie it in any way to policies that it regards as misguided. Leaving the eurozone would be a non-coercive act of rational self-interest. Only Germany seems to understand the irrefutable logic of economic science that saving and not spending is the path to prosperity. Patrick Barron
