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Germany's Schaeuble Blasts Central Banks: Money Printing Leads To Financial And Debt Crises
Thanks largely to his prominent role in Greece’s protracted bailout negotiations, German Finance Minister Wolfgang Schaueble has become something of an international symbol for fiscal rectitude.
Over the course of six painful months of talks between Athens and Brussels, the incorrigible FinMin was the go-to source for the prompt denial of any and all “Greece is fixed” rumors and by the time it was all said and done, Schaeuble managed not only to humiliate Alexis Tsipras by forcing the Greek premier to effectively sell out the Greek people’s referendum “no” vote, but also to serve notice to France and any other EMU debtor countries who might be listening that anyone unwilling to get in line may be served with a euro “time-out” notice from Berlin.
By “get in line”, we of course mean adopt the German version of fiscal responsibility, which is the subject of some debate currently as pressure mounts to find a solution for the region’s worsening refugee crisis.
Speaking to the Bundestag on Tuesday, Schaeuble delivered a sharp critique of the world’s addiction to debt and central bank printing press money, excerpts from which along with some commentary, can be found below, courtesy of Reuters:
An excessive reliance on debt and central bank stimulus is no way to manage an economy, German Finance Minister Wolfgang Schaeuble said on Tuesday, defending Berlin's pursuit of a balanced budget.
Germany has faced calls from European peers to invest more to stimulate demand with a view to generating more growth across the euro zone, but Schaeuble said a policy aimed at delivering sustainable public finances was the best course Berlin could take.
"Fewer debts, fewer crises, more sustainable growth ... that is the best policy we can produce in these times."
The government, which has agreed to free up an additional 6 billion euros ($6.7 billion) to pay for a record number of refugees arriving in Germany this year, wanted to deal with the influx without taking on new debt, Schaeuble said.
"We shouldn't pass on the bill for the tasks that are facing us now to future generations," he said, adding: "...being in favour of more debt and a further flooding of the markets with central bank money is neither original nor serious."
"Too much growth in credit does not solve any structural problems but leads to financial and debt crises," Schaeuble said. "Central banks' monetary policy measures can do little to change this in the long run."
"In international debates, the voices are growing louder that the overweighting of the financial sector versus the real economy - due in particular to the immense short-term profit opportunities - is a danger for sustainable, global growth."
So summing up, the solution to a debt problem is not in fact more debt, and borrowing from the future to finance the present isn't a very good idea. Furthermore, excessive credit growth leads to crises as can-kicking doesn't solve structural problems while the sacrifice of DM productive sector employment at the altar of short-term profit opportunities along with the financialization of the global economy only serves to undermine sustainable growth. Finally, anyone who advocates flooding the world with freshly-minted fiat money shouldn't be taken "seriously."
Someone forgot to tell Schaeuble that this kind of thinking has now been officially equated with terrorism...
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Debt is the instrument to enslave the world. With the current genocidal Bankster/Military/Spooks troika in charge, debt can only increase.
Global debt has grown by $57 trillion in seven years following the financial crisishttp://www.theguardian.com/news/datablog/2015/feb/05/global-debt-has-gro...
bullish ! despite this weekends war. (games?)
I don'T trust Schäuble at all.
Don't worry... he only says it like he means it. Without all that funny money and deficits that he derides- Volkswagen, Daimler, BASF, Siemens and BMW wouldn't have any customers, and not even the combined financial shenanigans of Deutsche Bank and Allianz could paper over that gaping hole in production and employment.
Unfortuately when you're focused on hyperinflation as the only end game, it often gets hard to see the forest through the trees where austerity is concerned.
Drudge Report has a link to an Infowar article about Muslim emigrants desperate to get to Germany. It starts off:
Muslim “refugees” in Budapest chanted “Allahu Akbar” and “f**k you” while others in Italy attacked an old lady and threw feces at bystanders as Germany announced that it would be prepared to take 500,000 asylum seekers every year.
Instead of looking to the future, Schaeuble should look in the rear view mirror to see the hordes Syrians, Ethiopians, Eritreans, Malians, Libyans and insane jihadists shoving the way through immigration checkpoints to turn Germany into the same cesspool as the home countries they left.
Muslim President Obama is behind this population disaster in the NWO Mediterrean theater of operations. Across America's southern border with Mexico, among the largest number of illegal border crossers now are Indians and mainland Chinese. Human trafficking now rivals dope dealing as a profit center for organized crime along the Mexican corridor.
The barbarians are not at the gate anymore, they are overrunning Europe. The bad economic news about Greece is a smokescreen to cover up the plans of Obama's NWO organ grinders. Whatever those plans are, they are no good for Zero Hedge readers.
Bankers are not enslaving the world, Socialist governments are!
The US Spectrum
Um...The socialists need CB's for pay for all those shortages of free shit.
Yep, and they need school teachers and the media to dispense their propoganda, does that make them evil also? Think about it...
To assist the million + refugees (aka Muslim hordes) entering Germany, it's estimated that financial costs for Germany could reach anywhere between 9 and 10.5 billion euros by the end of the year.
http://www.dw.com/en/refugee-crisis-to-cost-germany-10-billion-euros/a-1...
Moar Euro printing!
you need to figure out the difference between a sword, the hand that wields it, and the mind that controls it.
It all depends on whether you think fractional reserve banking is an invention of capitalism or socialism.
Fractional Reserve Banking: Something for the Little Guy
BS. That article just ignores so much. And I lived in a society with 100% reserve banking. The loans were available.
welfare socialism was invented by the banking mafia
It's a bit late to be bitching about it now. Germany wasn't worried when they were selling their stuff to the rest of the EU on credit, but now the bill is coming due and that nice big economy of theirs is on the hook for it.......
When Germany tells ECB "ausweis verboten", the fun will really start!
Schauble is 100% correct in this instance.
Actions speak lounder than words though.
Bullsear Catnip!
And a liitle late to the party with that bit of wisdom. The "wealth" of the dms is built on debt which is never intended to be repaid. In what plane is this guy operating? I think it is the sore winner perspective - game over, we won.
Mr Scheuble,
The Euro is a non-interest-bearing credit to the Central Bank, with the balancing asset coming from an interest-bearing government bond.
Without credit expansion, and continually rolled-over debt, how do you pay the interest on the bond?
It is impossible to pay so long as you accept this system, but require no credit expansion. There isn't enough money to cover both the principal and the coupon.
You cannot stand with one foot in fiscal responsibilty, as though you had a commodity-based currency, and the other foot in debt-financed mercantilism requiring a fiat currency.
You have to choose only one of these pillars. For when mixed, they of necessity destroy one another.
"It is impossible to pay so long as you accept this system, but require no credit expansion. There isn't enough money to cover both the principal and the coupon.
You cannot stand with one foot in fiscal responsibilty, as though you had a commodity-based currency, and the other foot in debt-financed mercantilism requiring a fiat currency. "
There NEVER is money to cover the coupon AND return of the principal.
This is the rule in ALL fiat ponzi schemes.
-THis is precisely how productivity and assets are confiscated by unbacked fiat emmissions/leverage: the interest component on the USE of the currency regime CAN NEVER BE PAID WITHOUT SOME EQUAL NOMINAL AMOUNT OF PRINCIPAL BEING DEFAULTED UPON.
" The GOVENRMENT, which has AGREED to free up an additional 6 billion euros ($6.7 billion) TO PAY for a record number of refugees arriving in Germany this year, WANTED to deal with the influx without taking on new debt, Schaeuble said. "
'The GOVERNMENT' agreed to Pay. NOT the Citizenry.
Bureaucrats agreed amongst themselves to Pay with someone else's money!!
The Bureaucrats did NOT offer to take pay cuts or benefits cuts or pension cuts in order to fund THEIR decision!
-It is easy to be generous when it's not your paycheck being forfeited!
German support for annual emmigration amounting to 1% or more of the population will collapse as soon as the inexorably rising tax bills to pay for them every year begin to mount.
...OR, will the costs be placed upon those that do not yet have a voice in such matters at all: the youth and unborn who have no franchise or pulpit?
Intersting that disbusments of publicfunds of $6.7B to pay for emergency accomodation of nearly a million migrants is considered politically acceptable while the attitude towards their fellow EU member and trading partner Greece is that everything must be paid for BY Greek austerity and infrastructure assets sales cum confiscations.
Another way to think about it is to ask, imagine what Greece's fiscal situation would have benn if they accepted 1% of their population in new refugees?
Exactly.
Germany did NOT volunteer to take in 800,000 indigent Greeks as refugees.
-The difference between indigent Greek and indigent African/M.E./Balkan migrants ...IS WHAT????
-How is such a double standard at all logical or defensible??
-The economic and political leader of Europe disparages their fellow Christians/Europeans and sanctimoniously rolls out the red carpet to embrace Islamists/Africans?
>There NEVER is money to cover the coupon AND return of the principal.
This is a strange and wrong dogma in anti-Fed circles.
A central bank can overcome the problem of debt-based money by simplying acting as an agent of consumption.
Example: CB loans $1 to Serf at 10% interest in a two agent universe. CB prints itself $0.20 to purchse Serf's wares each year. Serf is able to expire $0.10 of debt each year, eventually leading to a settlement of all debt in a debt-based fiat regime.
In other words, Ben's Helicopters do in fact resolve what is wrongly claimed to be a mathematical impossibility. The real issue then becomes clear when evaluating the merits of the present regime: are CBs able to act as more efficient consumers than individuals?
Many would be inclined to take as an a priori truth that they can not. Most of us would agree that, at present, they are not a positive force. But the reasoning that attempts to preclude even the possibility of CB efficiency is not as obvious as some claim; this is in fact why we have false assertions like the impossibility of settling debt under the current regime even though the assertion is so obviously false. These people are unable to deliniate the claim that they truly want to make and are merely indicting their own cognitive capacities.
We do NOT have to choose "only one of those two pillars".The economy is NOT a zero-sum closed system. It grows when the production of useful, necessary goods and services increases and shrinks when it decreases.
When there is economic growth, it pays the coupon, the interest and finances future growth. When the economy shrinks, none of that can happen. Borrowing only shifts future growth to the present, guaranteeing less future growth.
Humorless krauts are no fun but what Mr. Shaeuble says is absolutely true and correct - it is time to produce more useful and necessary goods and services (grow), not destroy future growth with debt.
Wealth redistribution schemes assume there is wealth to redistribute. Mr. Schaeuble is just warning that more debt will negate the underlying assumption. Pay attention.
>Borrowing only shifts future growth to the present, guaranteeing less future growth.
What about borrowing for profitable capital investment?
Then we're talking about shifting present consumption to future greater consumption.
So, obviously your assertion is wrong. One should take care to avoid such careless use of the language. It engenders even more egregious errors when the logical deduction that follows from it translates to policy based on a false axiomization.
"What about borrowing for profitable capital investment?"
Borrow and build today means less building in the future.
Building out of current cash flow shifts consumption to the future.
Printing money might not be original or serious but then again neither is the hope that Greece will repay her debt.
I knew I liked this guy!
https://miltonchurchill.wordpress.com/2015/07/14/austerity/
I'm surprised he hasn't had a run in with a nail gun.
They tried but the nails bounced off.
I think a silver steak, dipped in holy water might work.
I love steaks of all kinds, but grill would leave marks on a silver one
Yep, never get in between a Socialist and someone else's money!!!
He's in the know and has been hardened. You know how he got into that wheelchair, don't you? ;)
Wall Street is funding Nail Gun startups and IPOs to deal with this guy....
Germany can only run a trade surplus when other nations are irresponsible and run a trade defecit.
It's a zero sum game.
Banksters have to print to fight Putin and Xi and kill mid easterners.
That photo is priceless!
You go, Wolfie!
I was about to type something very similar, awesome look on both.
"We shouldn't pass on the bill for the tasks that are facing us now to future generations," - ?! Da FUK!
So letting a near Million Foregneirs into your country, most of which will end up on welfare, does not put a burden on future generations?
Aaaand super Mario will just keep smiling.
Seems kind of hipocritical of Schaeuble to blast central banks when Germany is the single greatest winner of the current system. They get paid to issue debt in super Mario QE. German enterpreneurs can hire people cheaper than any other northern nation and they can export to EU without any hurdles. Mr. Schaeuble is running a mercantlist scheme which seems like Austrian economics, but it definetly is not. Otherwise Germany sallaries should be higher than Dutch or Denmarks. I understand this stand, we produce more hence we should be paid more and get every Euro we earned. The problem with mercantelist economics is that it does not understand that we are all in the same boat. Still he is doing best for Germany as whole and Germany's elite especialy.
the equivalent of 1 of our fed governors/presidents who talk about the unintended consequences of QE yet they voted for it as well as keeping rates at 0
talk with your vote & if u feel that strongly against the policies being conducted, resign
otherwise STFU and fall into line with your masters
The thing about slithers (pols and crats), and grifters (banksters): When they tell the truth, or some form of it, they are still lying, and/or covering up something else.
One thing that he fails to mention is that as a "central banker," he is a thief.
But also this:
"An excessive reliance on debt and central bank stimulus is no way to manage an economy, German Finance Minister Wolfgang Schaeuble said on Tuesday, defending Berlin's pursuit of a balanced budget.
Germany has faced calls from European peers to invest more to stimulate demand with a view to generating more growth across the euro zone, but Schaeuble said a policy aimed at delivering sustainable public finances was the best course Berlin could take."
Seems to mean that he is signalling that a new tax is coming. Probably a Europe wide tax that is payable to Brussels.
Zion is a scheme, not an ethnicity.
And what does charging interest by a private banking cartel for the issuance of that paper lead to?
I guess I need to pay a tribute to a private banking cartel for the privilege of using toilet paper to wipe my ass!
what a lying 2 faced a hole. This scum bag & the corrupt world gov. including his, vote & fund this credit expansion / money printing
sort of like one of those gamble responsibly posters advice hung above casino urinals
The European Project is finished.
The European dream is slowly being exposed as just that, a Dream.
Have you heard from any western media about what is going on in Chisinau Moldova?
People are protesting against Government and especially Central Bankers.
But not a peep about it anywhere except RT.
The President is screaming for people to not lose the European Integrtaion dream against the screams of the people calling for his head. Truly inspiring.
Money printing aka deficit spending is a requirement of running modern nation states as per Michael Hudson, Mark Blythe, Martin Armstrong and Steve Keen. The alternative is for the government to exist only on taxes, which is itself a drain on the economy and a downward spiral. The Austrian narrative basically simplifies economics into "everything is a currency crisis" and/or "everything is a reflection of the relative value of the currency". The utility of Gold standards as such has also been called into question by the above thinkers, as has the ultimate viability of so-called Free Markets (see Paul Craig Roberts 'The Failure of Laissez-Faire Capitalism' for a pretty devastating critique of Ricardo's theory of free trade and a reminder that America was founded on protective tariffs and not 'comparative advantage'). So it turns out monetary debasement is an easy target for simple critiques, but plain old
monetary debasement, if it went into infrastructure spending and possibly into the pockets of citizens (The Citizen's Dividend, the Universal Basic Income), is actually one of the few arrangements which has the potential to cut the gordian knot of money creation/distribution.
One of our main problems is that we *dont* have plain old money printing. We have commercial banks tied
intimately to the money creation and distribution process. Greece's main problem right now is that it can't print money. Money printing to facilitate deficit spending is the proper role of a central bank, as per Mark Blythe and Michael Hudson. This is how America was able to participate in World War II.
The anarcho-reductionism implicit in some of the viewpoints here wants to act like there is no role of the government in contributing to the common good. That kind of cynical nihilism is implicitly wishing for a return to forms of social organization that are possibly thousands of years old. I lived in Europe at a time when the benefits of government spending were obvious: free education, free healthcare, amazing
free public transport. Although not everything was rosy, it was very clear to me that that society had
arrived at the correct way of using government spending: to reduce the cost of business/living across the board by facilitating those things that the public sector handles more efficiently than the private sector. See Michael Hudson's speeches and writings for a discussion of how privatization inevitably leads to the rent-extraction dynamic of 1700/1800s capitalism: the private entity in charge of a service
which the public is generally obliged to use, essentially ratchets up prices to what the market will bear. This is an example of an unregulated market which strangles all growth.
One example is public parking in the US in major cities. This is a problem which the government could solve relatively easily, by maintaining public parking spaces charging nothing or almost nothing, financed via deficit spending. Everyone in the city needs to access their job via car (for the most part), so this is an example of the Common Good being served. Instead of this, when I lived in a major US city where parking was privatized, I had to pay $250 a month for a parking spot. Over a year that amounts to $3K which I was not able to spend elsewhere in the economy, just for the luxury of a 8'x6' slab of concrete with painted lines on either side. There are numerous other examples where privatization has facilitated the rise of a new rentier class who get rich by charging arm-and-a-leg for what amount to basic services in many countries. In the American healthcare system, as someone recently commented, it costs thousands of dollars to cast a broken arm.
This isn't to say that government hasn't metastized, it very clearly has. You could produce as many or more examples of government becoming rent-extracting, regulation-inducing, etc. But the point is not
to imagine a parallel universe where markets exist without states. Nor to imagine that any body which
takes upon itself a desire to solve public problems will not be a 'government' (in my view, it will be),
nor to imagine that deficit spending is some kind of catch-22 that always destroys states according
to Hayek. Like I once mentioned, the fact that Zimbabwe and Weimar are so consistently mentioned in an
era when deficit spending has driven global growth for a century, is an indicator that we only have two
datapoints which are truly consistent with the hyperinflationary narrative of the crack-up boom idea.
I think the fear that money printing is inflationary actually reinforces the status quo, because commercial banks use it to support their idea that complex bond repurchase programs are somehow
better than 'just printing the stuff'. That immediately puts the new money in the hands of the banks.
So interestingly, the hyperinflation hypothesis / Austrian school has actually helped the commercial banks capture the monetary system, by instilling fear in Washington of using its own printing press.
You have to pay interest on bonds, and according to Martin Armstrong, 70% of our debt from accruing interest. In other words, if they would have just printed the money, the debt would be ~30% of what it is now.
Take the bus, you and your ilk are causing downtown parking rates to be too high.
Astoundingly simplistic. Please STFU for the common good.
Great photo of Schauble and that other git. The outsider scowls while the insider smirks. Gruesome.
Fewer debts? OK! So how do we go there? Creditors can either forgive current debts or the debtors can pay off their debt (without borrowing more). There are no other ways. The creditors seem totally unwilling to write off any debts, and expecting bankrupt entities to pay down their old debts, like Greece or even the US, is impossible without access to new credit. Schaeuble is full of shit because it was the Central Banks that set up the system that led to German trade surpluses by indebting many other importing countries, and Germany is totally unwilling to forgive any debts themselves. Many German financial institutions are certainly no examples of sound monetary practices either.
Fewer debts? OK! So how do we go there?
Debts are never the problem. Those are simply traders' in-process promises to deliver.
Defaults are the problem. Those are failures of traders to deliver as promised.
Oh, and of course rollovers are defaults ... revealing all governments to be the worst deadbeat traders of all.
Peculiar. In all recorded history they have never measured defaults.
Oh, that's right. We leave such measurements to governments don't we.
Once again, A Champion of the Status Quo blasting the Status Quo.
thou speaketh with forked tongue...
2 choices for Schaeuble...
1. Issure even more debt and pretend the economy is fine or ...
2. Admit the economy will never add up and change it.
Now they will never ever admit 2. so 1. it is then for now.
As if we needed any more proof the Nazi douche-fuck is a total fucking moron when it comes to economics.
Stimmt schon Liebe Herr Steubel! So where were you in '92?
Interesting.
Maybe a split brewing between the national corporatist wing of the EU and the banking mafia wing.
They're both crooked but the banking mafia are screwing it up for the corporatists.