Economy in an interview
“Germany can afford the high debts”
The state takes up a special fund of 500 billion euros to boost the economy. Who should repay that? Answers by economics professor Monika Schnitzer.
Ms. Schnitzer, new to 7 billion euros: that sounds worrying. It would be much better to be debt free or not?
A debt -free state that has a broken infrastructure, is technologically backward and whose economy does not grow is by no means better than a state that takes up debts and plays ahead. An economically strong country like Germany can also afford such a large debt package. It is important that it is spent on future -oriented investments.
Are the next generation now threatening juicy tax increases and hyperinflation?
The term hyperinflation is not right here. In any case, the interest payments become easier if we use the money well and thus generate growth. Then the tax revenue increases automatically.
To person
Monika Schnitzer63, has been part of the business council (“economic”) since April 2020, which advises the federal government. She has been the chair of the committee since October 2022. In the main job, she teaches as a professor of comparative economic research at the Ludwig Maximilians University in Munich (LMU). She received her doctorate and habilitated at the University of Bonn and was a visiting professor at various US top universities
How does a state do debt at all? Are the ministerial officials in front of credit comparison portals?
No, of course not. A state makes debt by issuing government bonds through the federal financial agency on the capital market. This is done in the context of irregular auctions. For example, there will be an auction next week in which ten -year federal bonds with a total value of 4.5 billion euros are to be spent.
The German state has a very good credit rating
Who will borrow a lot of money in the end?
The German state has a very good credit rating, it is a very good debtor. As a rule, central banks from other countries, large asset managers, banks or pension funds are grateful customers of German government bonds. And indirectly through these institutions also the German citizens.
Are the 500 billion euros then on a interest -bearing overnight account of the federal government?
The 500 billion euros are to be spent over the next ten to twelve years. The total loan is not taken in one fell swoop, but as required. The funds are then in the financial agency account at the Bundesbank and are not interest.
How high will interest rates be for Germany?
This will depend on when and how the debts will be recorded exactly and, above all, what promise this will be linked. The state takes up most of the debts of over ten years of federal bonds, and these currently have an interest of around 2.7 percent. This can be lower if the government believes that the money is spent on growth -promoting measures.
There is no repayment plan like the real estate loan
Is there – as for Häuslebauer – a repayment plan?
The federal bonds that the German state outputs have a fixed term and do not provide for a monthly repayment like the real estate loan. They are due at the end of the term and, unlike most real estate loans, they are usually not rejected or only really repaid to a small part, but mostly a debt rescheduling takes place by issuing new federal bonds.
Perhaps private investors can even from Special fund benefit?
It is currently difficult to say how the special fund will affect interest rates for savings assets. The stock market has reacted positively to the announcement, and if the money is really cleverly invested and arrives in the local economy, it will also support the courses, and this will also benefit private investors.
The state does not go bankrupt due to the special fund
Does Germany jeopardize its previously excellent creditworthiness as a “reliable and stable debtor” (AAA)?
I don’t see this danger. Germany is one of the few countries that have never lost the highest credit rating, although the debt rate was already significantly higher. Even with the special fund and more debt -financed defense, it is not to be expected that Germany runs the risk of losing this status.
Can Germany even go through the financial package?
You can really rule that out. Incidentally, the package now provides a freedom of debt. When and how the money will be spent, the Bundestag will decide in the parliamentary process in the next few years. There are still many control mechanisms so that this cannot get out of hand.
Source: Stern
I have been working in the news industry for over 6 years, first as a reporter and now as an editor. I have covered politics extensively, and my work has appeared in major newspapers and online news outlets around the world. In addition to my writing, I also contribute regularly to 24 Hours World.
