It’s quite rare to find a finance minister of the G20 deliver some common sense about central banking and governments’ reliance on debt. It’s rarer than a politician with knowledge of Austrian economics, or about anything other than statism and big government.
But German Finance Minister Wolfgang Schaeuble was espousing the virtues of surpluses and sound money during a speech Tuesday at the Bundestag lower house of parliament regarding the budget. He is attempting to ensure Berlin remains committed to a balanced budget, despite the number of matters that threaten the nation’s finances.
Schaeuble stated that debt burdens and central bank stimulus is not an effective way to manage an economy, grow an economy or ensure a stellar financial landscape for future generations.
“We want to make it without new debt. We mustn’t pass on the bill for the new tasks that we are facing to the next generation,” he told fellow legislators. “We are now in a position to react appropriately to this big challenge because we have created financial leeway over the past years.”
“Fewer debts, fewer crises, more sustainable growth … that is the best policy we can produce in these times,” the German finance minister said.
He noted that the largest European economy can produce a balanced budget in 2015 and 2016, even during the refugee crisis and the global economic downturn.
“We shouldn’t pass on the bill for the tasks that are facing us now to future generations,” he said. “Being in favour of more debt and a further flooding of the markets with central bank money is neither original nor serious.”
The German cabinet minister refused to mention the European Central Bank (ECB) specifically. However, he has lambasted the ECB numerous times, including the negative interest rates and the money-printing as it embraces its own form of quantitative easing.
“Too much growth in credit does not solve any structural problems but leads to financial and debt crises,” Schaeuble said. “Central banks’ monetary policy measures can do little to change this in the long run.”
Schaeuble was also an important voice during the Greek negotiations. This is what ZeroHedge writes about his involve throughout the negotiations between the Greek and German governments:
“Over the course of six painful months of talks between Athens and Brussels, the incorrigible FinMin was the go-to source for the prompt denial of any and all ‘Greece is fixed’ rumors and by the time it was all said and done, Schaeuble managed not only to humiliate Alexis Tsipras by forcing the Greek premier to effectively sell out the Greek people’s referendum ‘no’ vote, but also to serve notice to France and any other EMU debtor countries who might be listening that anyone unwilling to get in line may be served with a euro ‘time-out’ notice from Berlin.”
It’s indeed quite rare to find this level of civility and common sense in a public official. His comments should certainly anger Keynesians everywhere, and the former contingent of East Berlin.
His comments come as the German government is trying to free up 6 billion euros ($6.7 billion) to help pay for the record number of incoming refugees coming into the country this year.
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