Even the ECB thinks Germany needs to start spending more

Even the ECB thinks Germany needs to start spending more

Press quote (The Washington Post)
22 September 2014

Take a look at the chart below from Christian Odendahl, the chief economist at the Centre for European Reform. Once you account for depreciation, Germany's public investment on construction and equipment has actually been negative the past decade. It spends substantially less than other countries on education, too.

This is fiscal insanity. Germany has plenty of worthwhile projects to spend money on after systematically underinvesting in its people and infrastructure for 20 years. And, even before inflation, it can borrow for less than nothing. That's because, as crazy as it sounds, investors are actually paying Germany to borrow over two years. But out of some misplaced sense of fiscal self-righteousness, it refuses to do what will help itself grow and save money over the long-term: namely, borrow in the short-term.