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Home Publications Blogs Beat the Press Germany's Finance Minister Doesn't Understand Basic Economics

Germany's Finance Minister Doesn't Understand Basic Economics

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Sunday, 07 November 2010 22:30

This should have been the headline of an article in which Germany's finance minister both complained about the United States credit-led model of growth and the decline in the value of the dollar. A falling dollar is the mechanism through which the United States would get off its credit-led model of growth. It will make imports more expensive in the United States, leading us to buy fewer imports. It will also make our exports cheaper, leading us to increase exports. This will reduce the U.S. trade deficit and therefore its foreign borrowing.

Complaining about both the credit-led model of growth and then complaining about the decline in the currency is like complaining that the room is too hot and then complaining when someone turns on the air conditioner. Germany's finance minister apparently does not understand economics, which should have been the main point of this article.

Comments (6)Add Comment
Multinationals Are Us
written by izzatzo, November 08, 2010 7:28
Complaining about both the credit led model of growth and then complaining about the decline in the currency is like complaining that the room is too hot and then complaining when someone turns on the air conditioner.


It's export sellers threatening its import customers for daring to produce and sell the product themselves to pull out of a trade deficit.

It's part of the twisted austerity lecture, that if one country's currency declines in value to offset the recession presumably caused (going forward) by the credit model of growth, inflation will follow for both countries.

Thus fixing the growth problem with less debt is claimed to solve the problem without turning on the air conditioner by removing the hot air from the room in the first place - by reducing "too much" debt and money in circulation ... concurrent with reducing government stimulus spending and deficits.

The hell with your unemployment. Get frugal and buy our imports to keep up our employment.*

Brought to you by Multinationals Are Us, where there's always a job somewhere.
German Finance Minister Doesn't Understand Basic Economics
written by sherparick, November 08, 2010 8:34
Germany, like China, wants to eat its cake and have it to to use an old cliche. They like to have the moral thrill of self-righteously lecturing others (the U.S. is not exempt, in fact we were gold medal winners in that category for years, particularly in lecturing post bubble Japan, but now we flatter Japan with imitation!) while still regarding us as the "importer of last resort" and not wanting to change status quo. As Upton Sinclair stated in one of the truest observations in American letters: "It is difficult to get a man to understand something when his salary depends upon his not understanding it."
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About Beat the Press

Dean Baker is co-director of the Center for Economic and Policy Research in Washington, D.C. He is the author of several books, his latest being The End of Loser Liberalism: Making Markets Progressive. Read more about Dean.

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