Is Germany about to let the money genie out of the bottle?
It is a real possibility that the European Economic Community could lose its only solvent member, Germany. While the rest of the continent was busy borrowing money to support the best lifestyle in history, for the most people in history, the Germans were busy working their butts off and saving money.
Recent European elections have nailed austerity measures to a cross, doused them with gasoline, and then firebombed them. You can’t blame the people entirely. Asking citizens brought up on caviar to agree that eating porridge is really much better for them was bound to be a hard sell. In a lot of ways the people who oppose austerity measures in Europe are like the Republican Party here in the states. None of them wants to make any real spending cuts and yet nobody wants to pay more taxes either.
So there is really only one solution… Inflation; print more money. Pay off the “old” debt with “new” dollars which are worth considerably less than the old dollars were worth when you borrowed them.
This is “to hit the nail on top” as so many of my readers like to say, or the problem in a nutshell. Nations like Germany that have been financially responsible over the last half a century will be severely penalized for their thrifty ways. The money that they have been saving at the expense of a lavish life style will suddenly be worth considerably less.
So either Germany goes along with inflation and takes a huge hit in their wallet or they pull out of the EU and let the rest of the continent sink in a sea of its own red ink.
I’d say that puts the European Economic Community at the crossroads.