Ben Bernanke is upset. Germany is dishing out too many
Volkswagon Buses exports in relation to its imports and its neighbors. Go ahead, take a minute to read his blog post…
His basic argument is that the fact that Germany has an incredible trade surplus and no debt makes it difficult for Germany’s neighbors and is unfair to the rest of the world. When I read the article, I thought it illustrated clearly a difference in the values or philosophies of our current fiscal policies in the United States and those here in Germany.
Meanwhile, Germany can borrow for ten years at less than one-fifth of one percentage point, which, inflation-adjusted, corresponds to a negative real rate of interest.
This single quote should just about floor you. Germany’s credit rating is so high that they could actually make money through nothing but normal inflation of the Euro by issuing loans (which they wouldn’t do, of course, which is one reason their rating is so high). In comparison to a home loan this would amount to a $572 payment on a $200,000 home over thirty years for a mere total of $6,000 of interest!
For better or worse, the Germans are happy to hold this esteemed economic position. I doubt many other countries would see such inequality as so severe of a problem to hastily give it up. In any case, the people here attribute their success to their policies and behaviors in contrast to those of the other EU nations which have led them down the economic spiral.
Without being too serious, it’s funny to hear someone who helped lead the US into mountains of debt and interest payments chide another country for holding policies that have brought surplus and prosperity.
N.B. Germany does hold external debt, somewhere around five or six billion dollars, but they are also major international creditors, and have more money owed to them than they owe others. In comparison, the United States is also a major creditor, but owes much more money to other countries than is owed to it.