Merz: Debt, inflation, the labor market – society will pay a high price

Mail from Merz: Debt, inflation, lack of skilled workers: society will pay a heavy price

The “turning point” announced by the federal government is limited to unbridled spending dynamics and an ever-growing mountain of debt. This will translate into a consolidation of currency devaluation and economic stagnation if politicians fail to act.

Dear FOCUS Online Readers,

Finally, one could say: this week the ECB announced that it would raise interest rates very carefully and in small steps throughout the year. First of all: as announced, the ECB is ending the purchase of government bonds. In the future, euro area countries will have to borrow from normal credit markets again.

This is exactly what they seem to want to do. Debt levels in the euro area continue to rise, and few countries still adhere to the rules of the Stability and Growth Pact. Almost exactly 25 years ago, it was decided to create a room for maneuver in good times that can be used in crisis situations.

In two fiscal years, the federal government owes more debt than all governments in the first 40 years of the federal republic combined

If, however, increasing debt is incurred even in times of steady growth rates and high tax revenues, then major shocks such as a coronation pandemic or military build-up that were deemed necessary overnight can only be financed by questionable methods: the Corona by loan case An EU of several hundred billion euros, on the limit of what is permissible for the Bundeswehr through an exception to the Basic Law’s debt brake exception in the Basic Law itself.

In addition, there are so-called “reserves” from the 2017 refugee crisis and unused authorizations for loans from the federal coronation fund, which together account for more than € 100 billion of additional federal debt. In two budget years, the current federal government owes more debt than all federal governments combined in the first 40 years of the history of the Federal Republic of Germany.

About the author

Friedrich Merz is a lawyer and politician (CDU). In the years 1989-1994 he was a member of the European Parliament, and in the years 1994-2009 he was a member of the German Bundestag. There he was the chairman of the CDU / CSU parliamentary group in 2000-2002. In 2018, Merz ran unsuccessfully for president of the CDU, as in 2021. It was only on his third attempt that he was elected party leader at the CDU congress on January 22, 2022. Now Merz is again MP and chairman of the CDU / CSU faction.

In his “Mail von Merz”, the CDU politician analyzes and comments on current political events in Germany and beyond for FOCUS Online readers.

The “turning point” of the federal government is thus exhausted by the ever-increasing debts and the otherwise completely uncontrolled spending dynamics, especially in social policy. At the same time, the remnants of the labor market reforms of 2005-2010 are finally cleared up, the only thing that remains to “demand and promote” is financing with increasing amounts of payments – even in the event of a stubborn refusal to return to the labor market.

High indebtedness, a rapidly growing money supply, stagnation in the labor market, and a growing shortage of workers at virtually any skill level are a dangerous drink. All this with the FDP’s Finance Minister!

The “Progress Coalition” quickly became a government of procrastination and hesitation

As a society, we will pay a high price for this, first in worsening inflation, then in the stagnation of our economy, which has the potential for a deeper recession. The return to the path of price stability and economic growth, which we need to achieve the great transition to climate neutrality, will be very arduous and, in an aging society, will be more and more difficult to achieve day by day.

In a very short time, the “coalition of progress” in Berlin turned into a government of hesitations and hesitations, everyday quarrels and ghost rides in economic and financial policy. Just when it comes to spending money, it seems there’s no need to stop. This policy is reflected in the rate of inflation.

Anyway, have a nice weekend!

Regards, Friedrich Merz

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