With a GDP of around 4.3 trillion euros in 2024, 1% would be around 43 billion euros and all defence spending above that will be exempt from the debt brake.
Without U.S. support, Germany would need to increase defence spending further, up to 140 billion euros from 80 billion, equivalent to 3.5% of GDP, a study by research institute Bruegel and the Kiel Institute for the World Economy showed last month.
A special off-budget infrastructure fund of 500 billion euros of ten years will be created for the federal government, states and municipalities.
Germany’s central bank proposed earlier on Tuesday a far-reaching reform which could give the government up to 220 billion euros worth of extra cash for defence and investment this decade.
Does the above mean the German will just start printing money?
Western Europe hasn’t had a war since the 1940s. Prior to that it was always at war. The difference? US economic, political, and military dominance.
As the US recedes and declines due to its incompetent current leadership we see a rise in right-wing nationalism filling the vacuum. You folks really think having Germany become the dominant military power in the region is a good thing? Particularly a Germany facing economic decline with a growing anti-immigrant right-wing yearning for the “good old days” of Nietzsche’s master race?
That is one difference. Another big one is the European unification project which began in the '50s as a solution to the “Germany problem”.
German unification in the 1800s created a country whose strength could not be effectively counterbalanced by its neighbors, leading to instability and two world wars.
European integration, which began in the late 1950s managed to solve this issue. What used to be the “German Problem” became what could be called the “German Locomotive.”
European integration and economic growth remain key factors (and they are currently struggling).
Would “European integration” have occurred without US insistence? Can it be maintained without US involvement? Color me doubtful.
How long will an increasingly conservative Germany facing increasing demographic problems be willing to support its “weaker” European neighbors without active US involvement?
If US isolationists continue to hold power I would be very hesitant buying property in Belgium.
Economic/political globalism may have cause turmoil among some, but it was a powerful force for suppressing war. We move to protectionism and nationalism at our peril. It is a big mistake in my opinion.
The 1950-2016 years of growing globalism was far better than any other period in human history. Moving backwards is foolhardy.
At the end of WWII, while the rest of the world was in ruins or badly damaged, the USA was in the position to establish Pax Americana with the most powerful navy and the world’s reserve currency. As the world recovered, the balance of power started shifting. The first kink in the armor might have been the gold drain that led Nixon to close the gold window. Globalization accelerated the process. The good times allowed the left to grow in influence but that too had a backlash, the West tending back to the right. Now the USA is at the fork in the road, which way to take?
Under the umbrella of Pax Americana Europeans had no need for strong militaries. Better to spend the money on a good life. Now Europe is the same fork in the road but with fewer choices.
And the market continues falling. These are the times when you need the cash reserves so you are not forced to sell.
Yep. And US economy economy exploded as pent up consumer demand was released as rationing ended. The US had money burning in its pocket to guarantee freedom of the seas and protection for Europe. The good days. The US is no longer wealthy and has demographic issues though not as serious as Europe. Like Rome defending borders is harder and harder. The US is pulling back from global policing as it no longer has the means.
Is the issue that the US attempted too much, or that the US is losing so much to internal corruption? Some would concede, for instance, that creating a “sovereign wealth fund” and having the government fund it by buying crypto from your cronies has something of a smell to it.
What century are you guys living in? Since the days of ocean-crossing sailing ships there have always been global superpowers that dictate who get the economic spoils. If we decide not to be one, someone else will and chances are that it won’t be to our advantage. China is spending billions to lock up the natural resources of Africa, South America, and Asia just as European colonialists did a couple of centuries ago. We stand on the sidelines at our own peril.
Technology has made the economy global whether we like it or not. We will receive the fallout from a nuclear war between India and Pakistan. We will feel the impact of global warming. In an information/AI connected world, cyberterrorism and cyberblackmail will be the big threats and the US will be in a far better position to counter these as the global leader than if the BRICs consortium takes on that role.
A North Korean ICBM can reach America in an hour. This is not the time to try to hide behind protectionist walls, our version of the Maginot Line.
The main reason we have a national debt is because Americans are massively undertaxed for the quality of life and security Americans demand. Again, look at history. Our deficit explodes when we cut taxes or when we decide to engage in wars without raising taxes to pay for them.
And we really haven’t been “the global policeman” since Vietnam. The most expensive wars we have fought since then have been in our own self-interests, whether it be to keep Middle East oil cheap and available or to revenge 9/11. Genocides in Africa, Asia, and Haiti have largely been ignored by our military as have the drug cartels to the south. Our troops in Asia and Europe are a relatively cheap way of ensuring the stability and continuing support of our major economic trading partners.
We have been and will continue to be much better off economically and in terms of national security by raising taxes to be able to afford to lead the world than by retreating behind walls.
How much impact did the Mongols have on the Western Hemisphere at that time? The Mongols were a continental power, not a global one. In contrast, the seafaring Portuguese, Spanish, and English impacted the global economy.
The problem is that the USA spent hundreds of billions, even trillions, and DIDN’T “lock up” much at all. And most of it was borrowed money!
This isn’t really true. Taxation (Federal Receipts) as a percentage of GDP has remained in a rather narrow range since before WWII. Here’s a chart from FRED -
What is a fact is that government spending, all of Federal, State, and Local have grown WAY faster than GDP has grown and over those 80+ years consume more and more of GDP, almost monotonically increasing when smoothed out a bit. Here’s a chart of government spending of GDP -
You can easily see that when we used to have “big emergencies”, like WWI or WWII, we would rapidly increase spending and as soon as the emergency was over, we would bring spending back down to normal. But in recent decades, it appears that every time there is a “big emergency”, we ratchet up spending, but it never comes back down to normal. So as a result, government becomes more and more and more of GDP.
This also isn’t quite accurate. The massive spending that we’ve done around the world keeps oil cheap and available FOR EVERYONE. But, of course, we, the USA, pays the vast majority of that “insurance”. Yet, everyone around the world benefits. If we were “rich” and had extra money available, perhaps it might not be a big issue, but the fact that we borrow almost every penny to pay for it is untenable. It is leading us into a debt spiral that will utterly destroy us as a nation, as a superpower, and as a bastion of freedom. At this point, I’m not sure we can pull out of it yet, but we have a small chance of managing it, a very small chance. And it’s not only a small chance because we lack the political will to do so, it’s also because the arithmetic is already working against us. I’ve explained the arithmetic before, and it is very simple arithmetic, but too many people are willfully ignoring the simple arithmetic.
China is spending billions trying to lock up the natural resources of Africa, South America, and Asia…
When China was running non-stop big surpluses it tried to accomplish two things simultaneously: invest money overseas in fruitful ways that would have higher pay back than local projects, and through those investments get control to “lock up” whatever resource or facility.
Part of that has gone to waste by pure corruption and stupidity in both China’s and the receiving governments planning and execution, and also in geopolitics.
“Thank you, dear cherished eteranal friend for the seaport you built us…. “
“Scram you colonialist atheistical covert imperialist, the corrupt scum who allowed you into our country are now dead, imprisoned, or exiled and your illegal project is confiscated.”
Happened to the European colonialists too, but they made less money investment and more use of local quasi-enslavement. The British Empire was funded mostly from looting India.
Au contraire. The USA was very effective in protecting the one resource it was most interested in, oil. We didn’t have the foresight to think about rare earths.
Makes my point. The proportion of dependent elderly relative to the workforce has increased dramatically since WWII. Taxation of workers as a percentage of GDP should be much higher to provide the same level of care to the growing proportion of elderly. Instead, we funded the increase in medicare and social security by debt. Compare the US tax burden with other OECD countries. We are well below average even though we have a much larger military budget than most.
