Written by Tyler Durden
Written Thomas Kolbe
In Berlin government circles there is simply a increasing anticipation that a immense debt programme is ready to run. shortly The EUR 500 billion debt package – disguised as a "special fund" – will hit the economy like a wave of tides, allegedly to free the country from chronic recession.
Looking back, the word of Chancellor Friedrich Merz will most likely be remembered primarily for 1 reason: his gigantic orgy of debt. Half a trillion euro of fresh loans – added to the already planned yearly deficit of 3.3% of GDP – are expected to rekindle the weakening economical engine over the next decade.
Maastricht is history.
From year to year, the debt ceiling, which is already 65% of GDP, will increase by another 1.15 percent of fresh debt. The yearly net debt thus increases to 4.6 percent, which is far from the erstwhile "holy" thresholds from Maastricht. Those days are long gone. Berlin hopes for a Keynesian miracle, ignoring the fact that specified a policy always exacerbates structural problems alternatively than solving them.
According to Handelsblatt, citing interior sources, Minister of Economy Katharina Reiche (CDU) will present fresh data on economical growth on Wednesday.
Its ministry forecasts are closely consistent with the joint forecasts of leading German economical institutes: both the DIW and the RWI are now expecting GDP growth of 1.3% in 2026 and 1.4% in 2027.
They all number on the incentive to buy debts – the more, the better, and qualitative issues or restrictions on economical planning have long gone from sight. The belief that the economy can be managed centrally is now a dogma in Berlin. The free marketplace is treated as an opponent.
"Return Point" Merza
Chancellor Merz late announced a "return" in investment flows. After years of mass capital escape, he now claims that money returns to Germany. It seems to believe that an additional EUR 50 billion of fresh loans – mainly for climate projects, infrastructure and military expansion – will trigger a private investment boom. Through state guarantees, private capital is to be mobilised.
It can be assumed that debt-driven stimulation will revive the economy. In fact, it is simply a Habeck-style logic – the collapse of manufacture and bankruptcy are embedded in the cake.
Label fraud and voodoo economy
This "growth" is simply a statistical illusion. It does not reflect market-driven investments or real request – it is simply a long mirage driven, a fire lit by the printing press.
The consequences will be devastating: taxpayers will pay the bill through higher taxes or inflation erstwhile the fresh credit mass meets economical stagnation and limited supply, resulting in higher prices.
True prosperity and economical growth must be measured differently. In the free market, goods and services are created by actual demand. The state, in contrast, is becoming a origin of consumption that destroys purchasing power through bureaucracy.
Capital markets under pressure
The same applies to investments. Ideologically driven projects, specified as "green transformation", are actually programs for capital destruction. Drone uncommon resources from the private sector, rise backing costs and seal the labour marketplace by locking workers in unproductive bureaucracy.
For comparison: State share of GDP is presently about 50%.
With a planned fresh debt ratio of 4.7% next year and projected GDP growth of only 1.3%, the private sector would gotta shrink by around 3.4% in real terms to make the calculations work.
In another words: Germany is already deep in the debt spiral, in which all additional euro of public loans brings declining economical growth. The government plans to increase spending by another 4-5 percent next year, which will further burden the private economy. With the improvement of the state, the productive skeletal network shrinks. Berlin calls it "progress".
"New Dawn" of the Merz government
The administration is now preparing to inject its immense debt package into the dried-up channels of the green subsidies manufacture and the emerging war economy. On the Day of German Unity, Merz covered this with lofty rhetoric – he spoke of renewal, vigor and optimism, calling on citizens not to be paralyzed by fear.
But behind this staged optimism is nothing concrete. Not a word about who will yet pay the bill for this credit-driven fireworks – through taxes, inflation and erosion of savings. It's not "new dawn." It's a demolition party.
While Berlin and Brussels are 2 and 3 to support their state-powered pseudo-industry, others are moving in the other direction. The fiscal burden on citizens and businesses is falling in the United States. On Florida legislators even discuss the full abolition of property tax.
Washington deregulation the energy sector, releasing it from the eCO2 safety straitjacket – while in Germany any effort to reconstruct marketplace order is buried under green dogma.
March towards Ecosocialism
On the contrary, Berlin already paves the way for refinancing of its debt through higher inheritance taxes and the abolition of the taxation credit for spouses. Merz is working after hours to grow the already overdeveloped state sector, which presently absorbs more than half of the economy, at the same time step by step, displacing private entrepreneurship.
His promise to reduce bureaucratic costs by EUR 16 billion and to destruct 8 000 jobs in the public sector is part of the political realm of fairy tales. The distribution of the fresh debt stream itself will require thousands of fresh administrators.
Germany is on a disastrous way – towards a fresh form of ecosocialism, in which the state becomes the center of the universe again, and the marketplace is reduced to a specified auxiliary engine, which is intended to keep a fragile edifice on the surface for a while.
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About the author: Thomas Kolbe, born in 1978 in Neuss, Germany, is simply a certified economist. For more than 25 years, he has worked as a writer and media maker for clients from various industries and business associations. As a publicist, it focuses on economical processes and observes geopolitical events from the position of capital markets. His publications are consistent with the doctrine that focuses on the individual and its right to self-determination.
Translated by Google Translator
source:https://www.zerohedge.com/
