Germany’s Sacred ‘Black Zero’ Survives Climate Plan, As Fiscal Stimulus Hopes Still Remote

Anyone hoping Germany's climate change plan would tip a willingness on the part of Berlin to abandon the country's "black zero" fiscal policy was disappointed on Friday. Long story short, the climate initiative will not entail raising additional debt and therefore will not impact the government's budget. Rather, Germany will stick to its fiscal guns. Money raised from carbon certificates (along with higher taxes on flights and conventional cars) will apparently be used to fund incentives for el

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5 thoughts on “Germany’s Sacred ‘Black Zero’ Survives Climate Plan, As Fiscal Stimulus Hopes Still Remote

  1. Good for Germany to stick to its black zero. Everybody seems to agree that the world financial system is running out of options, so why would Germany start to act as crasy as the rest of the world? The strong countries should remain strong instead of bailing out countires which have borrowed from the future. Kind regards, Wouter

    1. the problem is, it is by no means clear that deficits matter. it looks increasingly like MMT is the “correct” way to think about things for advanced economies. the idea that germany would risk forcing its citizens to suffer through a downturn when they can issue 30-year, zero coupon debt is not only insane, but manifestly cruel.

      remember, all of this – the financial system – is a human construct. at the end of the day, it can only collapse/break down/etc. if humans allow it to. it’s a giant confidence game. there is no “bond market” — there are just humans and algos who trade bonds. that sounds silly, but people forget it all the time. i.e., the statement “what the bond market is saying” makes no sense. the “bond market” cannot “say” anything because the “bond market” doesn’t exist in the same way that the sky/ocean/etc. exists. point being: the idea that there are some immutable “truths” or “rules” that we need to follow when governing the supply/demand of paper money that we print is ridiculous on its face. germany should borrow money and ease.

      1. Indeed, it is a giant confidence game……and confidence can change very quick…..while zero procent depth still need to be paid back, so what is the common sense approach and…..okay the depth will never be paid back once the confidence goes….I guess better invest in assets that will keep its value regardless. Thanks.

      2. Germany does not have to borrow just because rates are low, there is no justification to follow corporate mal-practices or US deficit culture. The Germans, and smaller EU nations, are FED-up with failing monetary policies, QE, from the failing Draghi led ECB.

        1. “No justification”…. does “looming recession” not count?

          Berlin is literally going to allow the country to slide into recession out of sheer spite. Does that seem right to you?

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