Early last month, the Bundestag got to hear German Finance Minister Wolfgang Schaeuble's thoughts on the proliferation of ZIRP, NIRP, and unconventional monetary policy.
As you might imagine, he is not a fan.
Here are some notable excerpts:
"Fewer debts, fewer crises, more sustainable growth ... that is the best policy we can produce in these times."
"We shouldn't pass on the bill for the tasks that are facing us now to future generations”
“...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.”
“Central banks' monetary policy measures can do little to change this in the long run."
And just like that, in five crisply worded sentences, Schaeuble explained pretty much all that's wrong with the current global descent into Keyneisian insanity: 1) we need sustainable growth, 2) we should not be sticking our children and grandchildren with the bill while we borrow endlessly from the future, 3) the idea that we can print our way to prosperity is a joke, 4) runaway credit growth leads to larger and larger booms and subsequent busts, and 5) thinking that one can manage long-term economic outcomes by tinkering with policy is a fool's errand.
All of this is heresy in most corners of the centrally planned universe but then again, no one ever accused Schaeuble of caring much for decorum.
For anyone curious to know whether the FinMin had reconsidered his stance on the need for ultra accommodative policies now that the Volkswagen emissions scandal looks set to present a very serious threat to Germany's economy, the answer is "no." Here's Reuters [6]:
German Finance Minister Wolfgang Schaeuble said on Tuesday he was unhappy with the low interest rate environment and called for rates to rise "sooner rather than later".
Although it was not the first time Schaeuble has voiced support for a "normalisation" of rates, it also comes at a time when the German economy faces new threats from weakness in emerging markets and a diesel emissions scandal that has damaged its top carmaker Volkswagen .
Speaking at an engineering conference in Berlin, Schaeuble described interest rates as "too low" and said this was causing problems, particularly with regard to pension provisions.
Schaeuble said the monetary policy being pursued by central banks meant that there was sufficient liquidity on the markets around the world but he added: "I don't want us to get used to it remaining as it is."
He warned policymakers against falling into the trap of keeping rates low to actively support the economic outlook, comparing this to the situation of a "drug addict".
So sorry German automakers, you won't be getting Schaeuble's support where support means using the emissions debacle and subsequent fallout as the latest excuse to keep pursuing monetary madness in the name of supporting aggregate demand and maintaining export competitiveness.
