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Comment by luckylion | Hacker News Reader

I am aware of it. I'm also aware of the fact that it's a lot of bookkeeping, i.e. not counting bank bailout costs, pension guarantees etc, the implicit public debt looks very differently. And keep in mind that the last few years with little to no new debt (on the federal level) were during record tax income and strong growth that is now turning into a recession. With explicit public debt hovering around 65% of GDP, Germany is pretty average in both the world and Europe.

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In this environment, talking about the German government as if it were spending money carelessly seems to me to not reflect the reality.

People are willing to pay money for the privilege of lending money to the German government. Yet the German government, including the supposedly left-wing SPD, is still holding to the schwarze Null ("black zero," meaning a balanced budget). A rational policy in this environment would be to take advantage of negative interest rates to finance stimulus. Instead, they're dogmatically holding to the zero-deficit policy.

Look at Germany's spending, and then predict how it will be financed a year or two into a recession, especially with falling exports. Since it's hard to cut the expenses, you either increase taxes, or you increase debt. Taxes are already pretty high and unpopular. The "balanced" budget has been a thing since 2012, but hasn't in the past 50 years before that. It's not like it's virtually unknown for Germany to take on debt.

As for the SPD being left-wing: traditional political categories quickly break down when applied to Germany, the continuum is "far left, nothing, nothing, the super majority in the center, nothing, nothing, far right". There's very little actual difference between the "conservative" CDU, "social democrat" SPD, the socially progressive Green party and the "free markets will take care of that, whatever it is" FDP when it comes down to policies, which is also why Germany's policies don't change a lot when the government changes (the conservatives removed the military draft, the social democrats cut back the social system, and the pacifist Greens & social democrats went to war in Kosovo).

> A rational policy in this environment would be to take advantage of negative interest rates to finance stimulus.

In a time of growth, record tax income, strong-ish inflation (thank god for cellphones and smart tvs or it would shoot up like crazy)?

> Taxes are already pretty high and unpopular.

Taxes on income, yes. Taxes on spending, yes. Taxes on capital gains, not really. And taxes on property are virtually nonexistent. And where's that financial transaction tax people were talking about 10 years ago?

> Taxes on capital gains, not really.

The share of tax revenue they provide isn't that large, it's about as much as car tax. Even if they doubled it, it wouldn't really matter. Property taxes do exist, but they aren't a federal issue, they (together with a tax on company earnings) fund the local communities, the federal level is funded by income tax and sales tax, mostly.

> And where's that financial transaction tax people were talking about 10 years ago?

It was mostly activists talking about it in a "if we all got together and did this world wide, it would be so nice" kind of way. I don't see that happening any time soon.

> In a time of growth, record tax income, strong-ish inflation (thank god for cellphones and smart tvs or it would shoot up like crazy)?

Germany is on the verge of recession. Growth was negative last quarter. Inflation is around 1%, which is rather low.

So is the rational policy you recommend to go into debt for stimulus, and pay off the debts in subsequent years, through lower government spending? Or would it be to go into debt permanently, passing the interest payments on to future generations?

The interest payments here would be from the bond holders to the German state.

Right, but if you issue a 10-year €x bond and spend the €x, in 10 years you have to repay the bondholders, which means you either have to have saved up €x over the intervening years, or you have to take out another loan of €x at the prevailing interest rate.

Unless the state is expecting bond rates to remain negative indefinitely.

Debt is usually paid off by inflation. As in: If you have a non-zero inflation, your GDP grows accordingly (all other things being equal), so you can take on new debt and still have your debt-as-percentage-of-GDP stay the same.

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