The US Federal Reserve has committed itself to print as much money as it believes it needs to to keep the dragons at bay. Meanwhile, the Germans, who have been thrifty, see no reason why they should spend money they...
The Germans did spend their way out of the depression. They just used all the money they took from the Jews and spent everything they could on arms.
Shelley
December 17, 2008 11:19 AM
Jerry here. I learned the truth of this german attitude at World Youth Day in 2005 standing in a field waiting for Pope Benedict to come. The "30 something" German people there talked about how they were going through hard time, the taxes were high and they couldn't take the vacations they used to. When Germany brought in East Germany, they were debt free and took on East German debt. They work hard to NOT have a defecit. The general attitude was to buckle down and take it in order to get to financial solvency again. I think is goes back to the memory Germans have of the total devastation of their economy after WWI and WWII. They know they don't want to go there again and they are willing to sacrifice in the short term for long term financial stability.
Steve K.
December 17, 2008 11:44 AM
Well done, Germans. If only we had their fiscal responsibility.
Michele
December 17, 2008 11:58 AM
Not spending money you don't have....what a concept! They should try it sometime in this country....
Jeff Sullivan
December 17, 2008 12:11 PM
I am in a state of disbelief. I didn't think there were politicians anywhere in the Western world anymore who preached and practiced conservative common sense. Hang tough, Germany.
Pyrrho
December 17, 2008 12:14 PM
The Germans are not being thrifty.
When this severe downturn morphs into a depression, you'll have the Germans and German-controlled ECB (Hoover), and the Chinese (Smooth and Hawley) to thank for it.
Remember, economics is like physics. Physics on a large scale makes absolutely no sense from a terrestrial standpoint. Similarly, macroeconomics is wildly counterintuitive from a microeconomic vantage point.
Any macroeconomic policy that makes sense to Joe the Plumber is by definition a bad policy.
Pyrrho
December 17, 2008 12:17 PM
OK, I'm going to stop going for the low-hanging fruit and go out on a limb.
Bold predictions for 2009: (1) Trade war with China begins, (2) the Euro Zone begins to collapse.
Brian
December 17, 2008 12:21 PM
Huh? The ratio of debt-to-GDP for Germany is basically the same as that for the US, so what the heck are you talking about?
B. Minich
December 17, 2008 12:35 PM
Well, it would appear we bet to compare Keynesianism with a more conservative approach now. Which works better? Tune in five years from now and find out!
MH
December 17, 2008 12:57 PM
Pyrrho, physics on very small scales makes absolutely no sense either. So nature's is at least consistent.
I've been expecting to see a blog post about Bernard Madoff's securities firm and the 50 billion fraud. It seems tailor made for this blog.
Pyrrho
December 17, 2008 1:05 PM
B. Minich: Which works better? Tune in five years from now and find out!
Why wait? I can tell you know. If aggregate demand is allowed to collapse, a deflationary death spiral is 100% guaranteed. Only debt-monetized government spending can fill the breach now. And it is much less costly than the alternative.
MH: [P]hysics on very small scales makes absolutely no sense either.
It was a metaphor, pal. If there were such thing as nanoeconomics my metaphor would have been even better!
Pyrrho
December 17, 2008 1:07 PM
Well, I guess there is something called nanoeconomics. Grossly misnamed, however.
fish
December 17, 2008 1:33 PM
Any macroeconomic policy that makes sense to Joe the Plumber is by definition a bad policy
Wait...lets just clean this up a bit...."Any macroeconomic policy that makes sense to Joe the Plumber is by definition an impediment to continued looting of the treasury by upper echelon insiders".
Hey Pyro how are Paul and Kneel doing with Joe's (and his offsprings) tax money?
MI
December 17, 2008 1:42 PM
Assume, arguendo, that fiscal stimulus is necessary. (I go back & forth on this point, but I lean slightly in favor. Downward spirals of job losses, defaults, & decreased consumption are not pretty.)
Fiscal stimulus aims at temporarily substituting government consumption for (decreased) private consumption, at least 'till the latter gets back on its feet. In a country running a significant trade deficit, much of that money will end up financing purchases of imports, and hence exporting at least part of the stimulative effect. (This is true even if the government itself buys solely from American businesses; such businesses have subsidiaries & foreign branches, their workers are of course free to buy stuff from China, etc.)
This is what's making Britain & France so cranky. They're trying to help their own economies, but the free trade rules of the EU (and the current-account surplus they've allowed Germany accumulate) effectively allow Germany to "piggyback" off non-German stimulus programs; i.e., Germany gets part of the benefit, but (of course) bears none of the cost.
There are ways out of this dilemma. Option 1 is coordinated fiscal stimulus by every country in the EU (Germany included); that way, everyone may benefit, but everyone also picks up a piece of the cost. Option 2 is for deficit countries to lower their trade deficits via unilateral actions, e.g., restrictions on German (and other) imports (*).
Now, Germany is perfectly free to continue its thrifty ways (which, BTW, I admire). But if they insist on doing so, it shouldn't surprise them if others follow in their (unilateral) footsteps.
The aforementioned logic, BTW, applies to the China-US relationship as well. See here:
That's why it's important for the Chinese to allow the yuan to find its own level. But, of course, they won't allow that to happen. With the cost of inputs (raw materials) plunging, the Chinese trade surplus should continue to rise. Americans (and particularly the Europeans!) are going to get sick of the Chinese exporting unemployment to them real fast. Ergo, trade war.
Fish,
Feel free to substitute 'Fish' for 'Joe the Plumber' in my maxim.
Pyrrho
December 17, 2008 2:05 PM
MI,
That's probably what the people in your links are arguing. (It's not rocket science.) I'm just way too busy to read them right now.
rombald
December 17, 2008 2:09 PM
Cosimano - Well done. I wondered how long a discussion of German politics would continue before the Holocaust was mentioned. You were first. Well done again. How clever you are.
Pyrrho
December 17, 2008 2:18 PM
Something else warrants mention. The Germans, Japanese and Chinese have been, to one extent or another, free riders in the postwar economic system. This was part of a grand strategic bargain to keep Germany and Japan in the Western camp and, later, to ease integration of China into the world economy. The problem is the United States, Canada and the rest of Europe can no longer afford the costs associated with this bargain. So anybody who admires what the Germans, Japanese and Chinese have done has to realize that they have been able to pursue their current mecantilistic practices precisely because of this geopolitical bargain, and that these policies could not have been adopted by the US without causing a huge geopolitical crisis.
MI, you already know this ... ;^)
Pyrrho
December 17, 2008 2:21 PM
mecantilistic > mercantilistic
fish
December 17, 2008 2:23 PM
Feel free to substitute 'Fish' for 'Joe the Plumber' in my maxim.
Excellent Pyro....you are as snotty as I am and better yet, still willing to defend a rigged game!
You still managed to evade a response though! You favored the "bail out" more vigorously than any poster on this scribble fest. Do you see any significant improvement (Hell, I'll even take potential for improvement at this point) to the economy and status of this counties finances? Or will I have to take a lack of catastrophes unseen as evidence that those policies graciously brought to us by our "betters" have truly saved us all?
Your Name
December 17, 2008 3:11 PM
I agree with Pyrrho. A trade war is coming in 2009. And it is going to be in conjunction with a withdrawal of the American military from Europe and the western Pacific Rim. Troops will begin to be removed from South Korea. Okinawa bases (five) will start to be returned to the Japanese. Ramstein Air Base in western Germany will begin to be closed. And, as Pyrrho indicates above, the Euro Zone economically and politically will begin to collapse.
Pyrrho
December 17, 2008 3:20 PM
Fish,
Here's your answer.
1) It's not a 'rigged game'. It's science!
2) Nothing is going to save us from one hell of a downturn.
3) US fiscal policy will probably prevent a deflationary spiral from taking hold. 'Joe the Plumber' will not notice.
4) The fiscal and monetary policies of other countries stand a good chance of taking us all down, but those countries will suffer more from their folly than we will.
Sorry about the snottiness. I've been lectured by buffoons so often and for so long that arrogance is my default setting. (I'm not saying you're one of these buffoons, BTW. It's just that you triggered that conditioned response.)
Buckminster Fusher
December 17, 2008 3:30 PM
Pyrrho writes 'Remember, economics is like physics."
No it is not. Economist like to think that they are hard scientists and not social scientist, but that doesn't make it so.
Greenspan "I found a flaw...", what an ass.
If economists hadn't had so much faith in their "laws" and hypothetical free markets, then we wouldn't be in as big of a pickle right now.
ScurvyOaks
December 17, 2008 4:27 PM
Brian, well done. That's exactly the point I was going to make. According to the IMF, Germany's public debt as a percent of GDP is 76.4, compared to 61.5% for the US. Germany has less manouvering room in the public debt realm. Good for Merkel for not being reckless; at the same time, the article's suggestion of a high level of historical thriftiness of the part of the German fisc doesn't seem to match reality.
(The NYT cherry picking the facts to make the US look bad and an EU country look good? Say it isn't so!!!)
Pyrrho
December 17, 2008 5:01 PM
Brian, ScurvyOaks,
What you say is true but a lot of that debt is the result of reunification.
stefanie
December 17, 2008 6:25 PM
Is Germany going to take over its own defense 100% (especially from possible Russian incursion?)
Until they do that, they are not operating on a level playing field as the US (we have been carrying Germany *and* Japan's defense since the end of WW II.)
ScurvyOaks
December 17, 2008 6:28 PM
Pyrrho, I stand corrected.
And Shelley, I obviously should have given more credit to your comment.
Joseph
December 17, 2008 6:43 PM
Exactly. When deflation hits your economy, you try to make money more expensive not less. That worked out so well in the 1930s. I for one hope that Germany and neo-hooverite Republicans can bring that era about again.
Ex-Pat Mom
December 17, 2008 6:57 PM
I have been living in Berlin with my husband and four kids for nearly two years now, and while there are still many things we all miss about America, we have been utterly impressed with much of what we have observed about everyday German life. No doubt many of their actions and cultural affectations can be traced to post-War effects, but they're still doing a lot of things right. This place is clean and safe, the housing is affordable, the locally grown produce and meats are great, nearly everyone walks or rides a bike to get around--even in the snow or bitter cold. These are not people who shy away from being told to suck it up a bit. The degree of casual, everyday thrift and personal responsibility is stunning. If they are holding their own during the current crisis, they at least deserve some credit for their willingness to go without, pay more for quality, buy less, buy local, and live more simply, all without any of the whining that is apparently supposed to come with self-sacrifice and denial. We certainly look forward to the day when we can move home to America but in the meantime, we are trying to absorb all the best that this frugal, modest, pro-environment country seems to have figured out.
AML
December 17, 2008 7:45 PM
Americans of German descent form the largest self-identified ancestry group in the U.S., outnumbering the Irish and English. A lot of what we think of as American habits of hard work, thriftiness and personal responsibility came from our German ancestors.
Clare Krishan
December 17, 2008 11:34 PM
Who cares about Berlin?
Worry about Weimar -- it's a lot closer to home...
our money supply M0 has increased more in the last 90 days than in all the last 83 YEARS...
There is nothing "scientific" about the Fed / Treasury's aggregate numbers -- their playing with fire, and we're the ones getting burned. Fans of Keynes would have you believe the laws of economics are like those of biology, not physics. We're merely feral "animal spirits," coralled down on the farm, as Orwell presciently foresaw, all equal just some more equal than others?
Nonsense!
Humans have a much more profound capacity when free to form intent to act than merely following carnal appetite. Metaphysics and all that... Menger et al... so old hat, right? Well Hayek & co. built the German miracle on many of those precepts, perhaps they deserve a second look...
Carey J.
December 18, 2008 1:02 AM
Pyrrho wrote, "Any macroeconomic policy that makes sense to Joe the Plumber is by definition a bad policy." I suspect Phrrho and his ilk really think that any policy that makes sense to Joe the Plumber is by definition a bad policy.
Matt, Hartford CT
December 18, 2008 2:00 PM
Phyrro Writes: "So anybody who admires what the Germans, Japanese and Chinese have done has to realize that they have been able to pursue their current mercantilistic practices precisely because of this geopolitical bargain, and that these policies could not have been adopted by the US without causing a huge geopolitical crisis."
That may be true, in part, but it's also important to note here that we didn't do this for free. It's been a symbiotic and beneficial relationship. The price we exacted for this level of favoritism has been pretty hefty, and I would say that more than tips the balance in our favor. We lean on these economies alot and also give them a reason to do business. We are the ones who aren't playing on a level playing field.
It's hard to put Germany into the same category as Japan and China though, because our primary maneuvers occured so long ago, and it has been a relatively self-sustaining economy since then (compared to the Japanese economy).
If I were to say which of the EU bloc is the best prepared to stand on its own two feet (if the American buying-machine ceased to exist), it would definitely be Germany. GB exists solely to spread it's service around the world, whereas Germany (and to some extent, eastern europe) maintains a pretty robust manufacturing base in the country and could easily operate at significant growth levels without the influence of external forces, if that is your goal.
The same can't really be said about France, Spain, or even the USA to a certain degree (though this is arguable, because we would simply have to consolidate our priorities.) The others simply lack the resources necessary to carry on robust economic growth without external factors.
Ex-Pat Mom writes: "The degree of casual, everyday thrift and personal responsibility is stunning."
Glad to see you are enjoying yourself. I've spent many months there off-and-on. Germany is a fantastic country and they really learned a lot after WWII about personal responsibility and accountability both in society and government. There is a lot we could learn from their meticulous and methodical nature. Least of which is a Garbage can on EVERY street corner.
The basic problem I have with the whole comparison, here in the US, is that Germany proves that social initiatives do not have to be prohibitively expensive to be effective - as they often are here in the US. Everything is on such a large scale, we find it easier to throw money at our problems than to sit down and hammer out a best-case solution and implement it. We always make our decisions on a dichotomy of two option; Option A at the expense of B. Health care at the cost of Education, or whatever comparison is politically popular that day. We never consider that we could do both if we work at it. Too often we sacrifice our expectation to the expense of maintaining an archaic establishment (too many examples to list).It comes down to work versus utility. We simply do not see the benefit (or it is not "politically viable") in working harder when we can simply buy (PRINT!) our way out of a problem. Thanks John Maynard... for that one.
Pyrrho
December 19, 2008 11:08 AM
Worry about Weimar -- it's a lot closer to home...
Clare, that statement is beyond pathetic. I'm not going to bother calling you clueless because, as a critic of empiricism, you do not even believe in the necessity of clues.
Pyrrho
December 19, 2008 11:13 AM
Matt,
You make several good points, but I believe my criticism still stands. The three countries I cited are overly dependent on exports. Nations with persistently large surpluses should see their currencies rise in value. In the case of Germany, locking its quarry into a currency union with them is going to blow up on them. Mark my words (yuk, yuk).
We simply do not see the benefit (or it is not "politically viable") in working harder when we can simply buy (PRINT!) our way out of a problem. Thanks John Maynard... for that one.
Aw, come on! If you're going to criticize Keynes, please take the time to understand him first.
Pyrrho
December 19, 2008 11:32 AM
I suspect [Pyrrho] and his ilk really think that any policy that makes sense to Joe the Plumber is by definition a bad policy.
I suspect it hasn't occurred to Carey 'and his ilk' that the very idea of Joe having an opinion on macroeconomic policy is patently ridiculous. I wouldn't expect Joe to listen to my opinion about plumbing because I don't know the first thing about it. Ditto economics, which is several orders of magnitude more difficult to comprehend.
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Rod Dreher is an editorial columnist for the Dallas Morning News, and author of "Crunchy Cons" (Crown Forum), a nonfiction book about conservatives, most of them religious, whose faith and political convictions sometimes put them at odds with mainstream conservatives. The views expressed in this blog are his own.
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The Germans did spend their way out of the depression. They just used all the money they took from the Jews and spent everything they could on arms.
Jerry here. I learned the truth of this german attitude at World Youth Day in 2005 standing in a field waiting for Pope Benedict to come. The "30 something" German people there talked about how they were going through hard time, the taxes were high and they couldn't take the vacations they used to. When Germany brought in East Germany, they were debt free and took on East German debt. They work hard to NOT have a defecit. The general attitude was to buckle down and take it in order to get to financial solvency again. I think is goes back to the memory Germans have of the total devastation of their economy after WWI and WWII. They know they don't want to go there again and they are willing to sacrifice in the short term for long term financial stability.
Well done, Germans. If only we had their fiscal responsibility.
Not spending money you don't have....what a concept! They should try it sometime in this country....
I am in a state of disbelief. I didn't think there were politicians anywhere in the Western world anymore who preached and practiced conservative common sense. Hang tough, Germany.
The Germans are not being thrifty.
When this severe downturn morphs into a depression, you'll have the Germans and German-controlled ECB (Hoover), and the Chinese (Smooth and Hawley) to thank for it.
Remember, economics is like physics. Physics on a large scale makes absolutely no sense from a terrestrial standpoint. Similarly, macroeconomics is wildly counterintuitive from a microeconomic vantage point.
Any macroeconomic policy that makes sense to Joe the Plumber is by definition a bad policy.
OK, I'm going to stop going for the low-hanging fruit and go out on a limb.
Bold predictions for 2009: (1) Trade war with China begins, (2) the Euro Zone begins to collapse.
Huh? The ratio of debt-to-GDP for Germany is basically the same as that for the US, so what the heck are you talking about?
Well, it would appear we bet to compare Keynesianism with a more conservative approach now. Which works better? Tune in five years from now and find out!
Pyrrho, physics on very small scales makes absolutely no sense either. So nature's is at least consistent.
I've been expecting to see a blog post about Bernard Madoff's securities firm and the 50 billion fraud. It seems tailor made for this blog.
B. Minich: Which works better? Tune in five years from now and find out!
Why wait? I can tell you know. If aggregate demand is allowed to collapse, a deflationary death spiral is 100% guaranteed. Only debt-monetized government spending can fill the breach now. And it is much less costly than the alternative.
MH: [P]hysics on very small scales makes absolutely no sense either.
It was a metaphor, pal. If there were such thing as nanoeconomics my metaphor would have been even better!
Well, I guess there is something called nanoeconomics. Grossly misnamed, however.
Any macroeconomic policy that makes sense to Joe the Plumber is by definition a bad policy
Wait...lets just clean this up a bit...."Any macroeconomic policy that makes sense to Joe the Plumber is by definition an impediment to continued looting of the treasury by upper echelon insiders".
Hey Pyro how are Paul and Kneel doing with Joe's (and his offsprings) tax money?
Assume, arguendo, that fiscal stimulus is necessary. (I go back & forth on this point, but I lean slightly in favor. Downward spirals of job losses, defaults, & decreased consumption are not pretty.)
Fiscal stimulus aims at temporarily substituting government consumption for (decreased) private consumption, at least 'till the latter gets back on its feet. In a country running a significant trade deficit, much of that money will end up financing purchases of imports, and hence exporting at least part of the stimulative effect. (This is true even if the government itself buys solely from American businesses; such businesses have subsidiaries & foreign branches, their workers are of course free to buy stuff from China, etc.)
This is what's making Britain & France so cranky. They're trying to help their own economies, but the free trade rules of the EU (and the current-account surplus they've allowed Germany accumulate) effectively allow Germany to "piggyback" off non-German stimulus programs; i.e., Germany gets part of the benefit, but (of course) bears none of the cost.
There are ways out of this dilemma. Option 1 is coordinated fiscal stimulus by every country in the EU (Germany included); that way, everyone may benefit, but everyone also picks up a piece of the cost. Option 2 is for deficit countries to lower their trade deficits via unilateral actions, e.g., restrictions on German (and other) imports (*).
Now, Germany is perfectly free to continue its thrifty ways (which, BTW, I admire). But if they insist on doing so, it shouldn't surprise them if others follow in their (unilateral) footsteps.
The aforementioned logic, BTW, applies to the China-US relationship as well. See here:
mpettis.com/2008/12/germany-is-fighting-with-europe-can-china-be-far-behind/
At least by Pettis' account, the Germans aren't quite so virtuous as some might think.
More background re. the possibility of a trade war involving China:
mpettis.com/2008/12/dani-rodrik-is-letting-the-cat-out-of-the-bag/
(*) rodrik.typepad.com/dani_rodriks_weblog/2008/12/some-unpleasant-keynesian-arithmetic.html
rodrik.typepad.com/dani_rodriks_weblog/2008/12/does-mercantilism-work-in-a-keynesian-world.html
MI,
That's why it's important for the Chinese to allow the yuan to find its own level. But, of course, they won't allow that to happen. With the cost of inputs (raw materials) plunging, the Chinese trade surplus should continue to rise. Americans (and particularly the Europeans!) are going to get sick of the Chinese exporting unemployment to them real fast. Ergo, trade war.
Fish,
Feel free to substitute 'Fish' for 'Joe the Plumber' in my maxim.
MI,
That's probably what the people in your links are arguing. (It's not rocket science.) I'm just way too busy to read them right now.
Cosimano - Well done. I wondered how long a discussion of German politics would continue before the Holocaust was mentioned. You were first. Well done again. How clever you are.
Something else warrants mention. The Germans, Japanese and Chinese have been, to one extent or another, free riders in the postwar economic system. This was part of a grand strategic bargain to keep Germany and Japan in the Western camp and, later, to ease integration of China into the world economy. The problem is the United States, Canada and the rest of Europe can no longer afford the costs associated with this bargain. So anybody who admires what the Germans, Japanese and Chinese have done has to realize that they have been able to pursue their current mecantilistic practices precisely because of this geopolitical bargain, and that these policies could not have been adopted by the US without causing a huge geopolitical crisis.
MI, you already know this ... ;^)
mecantilistic > mercantilistic
Feel free to substitute 'Fish' for 'Joe the Plumber' in my maxim.
Excellent Pyro....you are as snotty as I am and better yet, still willing to defend a rigged game!
You still managed to evade a response though! You favored the "bail out" more vigorously than any poster on this scribble fest. Do you see any significant improvement (Hell, I'll even take potential for improvement at this point) to the economy and status of this counties finances? Or will I have to take a lack of catastrophes unseen as evidence that those policies graciously brought to us by our "betters" have truly saved us all?
I agree with Pyrrho. A trade war is coming in 2009. And it is going to be in conjunction with a withdrawal of the American military from Europe and the western Pacific Rim. Troops will begin to be removed from South Korea. Okinawa bases (five) will start to be returned to the Japanese. Ramstein Air Base in western Germany will begin to be closed. And, as Pyrrho indicates above, the Euro Zone economically and politically will begin to collapse.
Fish,
Here's your answer.
1) It's not a 'rigged game'. It's science!
2) Nothing is going to save us from one hell of a downturn.
3) US fiscal policy will probably prevent a deflationary spiral from taking hold. 'Joe the Plumber' will not notice.
4) The fiscal and monetary policies of other countries stand a good chance of taking us all down, but those countries will suffer more from their folly than we will.
Sorry about the snottiness. I've been lectured by buffoons so often and for so long that arrogance is my default setting. (I'm not saying you're one of these buffoons, BTW. It's just that you triggered that conditioned response.)
Pyrrho writes 'Remember, economics is like physics."
No it is not. Economist like to think that they are hard scientists and not social scientist, but that doesn't make it so.
Greenspan "I found a flaw...", what an ass.
If economists hadn't had so much faith in their "laws" and hypothetical free markets, then we wouldn't be in as big of a pickle right now.
Brian, well done. That's exactly the point I was going to make. According to the IMF, Germany's public debt as a percent of GDP is 76.4, compared to 61.5% for the US. Germany has less manouvering room in the public debt realm. Good for Merkel for not being reckless; at the same time, the article's suggestion of a high level of historical thriftiness of the part of the German fisc doesn't seem to match reality.
(The NYT cherry picking the facts to make the US look bad and an EU country look good? Say it isn't so!!!)
Brian, ScurvyOaks,
What you say is true but a lot of that debt is the result of reunification.
Is Germany going to take over its own defense 100% (especially from possible Russian incursion?)
Until they do that, they are not operating on a level playing field as the US (we have been carrying Germany *and* Japan's defense since the end of WW II.)
Pyrrho, I stand corrected.
And Shelley, I obviously should have given more credit to your comment.
Exactly. When deflation hits your economy, you try to make money more expensive not less. That worked out so well in the 1930s. I for one hope that Germany and neo-hooverite Republicans can bring that era about again.
I have been living in Berlin with my husband and four kids for nearly two years now, and while there are still many things we all miss about America, we have been utterly impressed with much of what we have observed about everyday German life. No doubt many of their actions and cultural affectations can be traced to post-War effects, but they're still doing a lot of things right. This place is clean and safe, the housing is affordable, the locally grown produce and meats are great, nearly everyone walks or rides a bike to get around--even in the snow or bitter cold. These are not people who shy away from being told to suck it up a bit. The degree of casual, everyday thrift and personal responsibility is stunning. If they are holding their own during the current crisis, they at least deserve some credit for their willingness to go without, pay more for quality, buy less, buy local, and live more simply, all without any of the whining that is apparently supposed to come with self-sacrifice and denial. We certainly look forward to the day when we can move home to America but in the meantime, we are trying to absorb all the best that this frugal, modest, pro-environment country seems to have figured out.
Americans of German descent form the largest self-identified ancestry group in the U.S., outnumbering the Irish and English. A lot of what we think of as American habits of hard work, thriftiness and personal responsibility came from our German ancestors.
Who cares about Berlin?
Worry about Weimar -- it's a lot closer to home...
our money supply M0 has increased more in the last 90 days than in all the last 83 YEARS...
http://www.lewrockwell.com/blog/lewrw/archives/024458.html#more
There is nothing "scientific" about the Fed / Treasury's aggregate numbers -- their playing with fire, and we're the ones getting burned. Fans of Keynes would have you believe the laws of economics are like those of biology, not physics. We're merely feral "animal spirits," coralled down on the farm, as Orwell presciently foresaw, all equal just some more equal than others?
Nonsense!
Humans have a much more profound capacity when free to form intent to act than merely following carnal appetite. Metaphysics and all that... Menger et al... so old hat, right? Well Hayek & co. built the German miracle on many of those precepts, perhaps they deserve a second look...
Pyrrho wrote, "Any macroeconomic policy that makes sense to Joe the Plumber is by definition a bad policy." I suspect Phrrho and his ilk really think that any policy that makes sense to Joe the Plumber is by definition a bad policy.
Phyrro Writes: "So anybody who admires what the Germans, Japanese and Chinese have done has to realize that they have been able to pursue their current mercantilistic practices precisely because of this geopolitical bargain, and that these policies could not have been adopted by the US without causing a huge geopolitical crisis."
That may be true, in part, but it's also important to note here that we didn't do this for free. It's been a symbiotic and beneficial relationship. The price we exacted for this level of favoritism has been pretty hefty, and I would say that more than tips the balance in our favor. We lean on these economies alot and also give them a reason to do business. We are the ones who aren't playing on a level playing field.
It's hard to put Germany into the same category as Japan and China though, because our primary maneuvers occured so long ago, and it has been a relatively self-sustaining economy since then (compared to the Japanese economy).
If I were to say which of the EU bloc is the best prepared to stand on its own two feet (if the American buying-machine ceased to exist), it would definitely be Germany. GB exists solely to spread it's service around the world, whereas Germany (and to some extent, eastern europe) maintains a pretty robust manufacturing base in the country and could easily operate at significant growth levels without the influence of external forces, if that is your goal.
The same can't really be said about France, Spain, or even the USA to a certain degree (though this is arguable, because we would simply have to consolidate our priorities.) The others simply lack the resources necessary to carry on robust economic growth without external factors.
Ex-Pat Mom writes: "The degree of casual, everyday thrift and personal responsibility is stunning."
Glad to see you are enjoying yourself. I've spent many months there off-and-on. Germany is a fantastic country and they really learned a lot after WWII about personal responsibility and accountability both in society and government. There is a lot we could learn from their meticulous and methodical nature. Least of which is a Garbage can on EVERY street corner.
The basic problem I have with the whole comparison, here in the US, is that Germany proves that social initiatives do not have to be prohibitively expensive to be effective - as they often are here in the US. Everything is on such a large scale, we find it easier to throw money at our problems than to sit down and hammer out a best-case solution and implement it. We always make our decisions on a dichotomy of two option; Option A at the expense of B. Health care at the cost of Education, or whatever comparison is politically popular that day. We never consider that we could do both if we work at it. Too often we sacrifice our expectation to the expense of maintaining an archaic establishment (too many examples to list).It comes down to work versus utility. We simply do not see the benefit (or it is not "politically viable") in working harder when we can simply buy (PRINT!) our way out of a problem. Thanks John Maynard... for that one.
Worry about Weimar -- it's a lot closer to home...
Clare, that statement is beyond pathetic. I'm not going to bother calling you clueless because, as a critic of empiricism, you do not even believe in the necessity of clues.
Matt,
You make several good points, but I believe my criticism still stands. The three countries I cited are overly dependent on exports. Nations with persistently large surpluses should see their currencies rise in value. In the case of Germany, locking its quarry into a currency union with them is going to blow up on them. Mark my words (yuk, yuk).
We simply do not see the benefit (or it is not "politically viable") in working harder when we can simply buy (PRINT!) our way out of a problem. Thanks John Maynard... for that one.
Aw, come on! If you're going to criticize Keynes, please take the time to understand him first.
I suspect [Pyrrho] and his ilk really think that any policy that makes sense to Joe the Plumber is by definition a bad policy.
I suspect it hasn't occurred to Carey 'and his ilk' that the very idea of Joe having an opinion on macroeconomic policy is patently ridiculous. I wouldn't expect Joe to listen to my opinion about plumbing because I don't know the first thing about it. Ditto economics, which is several orders of magnitude more difficult to comprehend.
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