What is truth?

Greece Germany Schauble

We all know Germany (and the German minister of Finance Schauble in particular) were raising hell about giving Greece another pile of cash before any strict reformation measures were pushed through and approved. That was understandable as Germany was very likely the European country which has experienced the worst period of inflation in the past 100 years, and it wanted to prevent another Weimar-disaster altogether.

In a quite extensive report from the Halle Institute for Economic Research, the authors have tried to establish the total impact of the Greek debt crisis on the German government budget, and the results are even more stunning than what you’d originally be inclined to think.

Germany Government Bond

Source: Report

According to the data, the interest rate Germany had to pay on the newly issued government bonds dropped like a stone, and as far as we’re aware, this is the first official report trying to calculate the total benefit of the lower interest rates for the German government. As you can see on the previous picture, there was a huge difference between the price Germany had to pay in 2009 versus this year, and the researchers are estimating the benefit to in excess of $100B per year.

Germany Government Bond 2

Source: ibidem

Okay, enough about the past, what does this mean about the future? Even though Germany is opposed against too much government interference in the financial system as well as pumping too much liquidity in the financial markets (by the ECB), it sure looks like it definitely doesn’t dislike the current low-yield environment as it saves billions of euros on an annual basis.

Let’s try to put a number on this. The total German government debt is approximately 1.8 trillion EUR. Every one percent difference in the yield it has to pay on its debt has an impact of 18B EUR per year on the government budget. That means that if the long-term interest rate goes up to 3%, the German Ministry of Finance will have to cough up an additional 40B EUR in interest payments. As the total pool of labor force is approximately 44 million, every tax payer in Germany would see its annual tax bill increase by 1000 EUR per year.

Germany Govt Debt

Source: tradingeconomics.com

full article at source of article:https://secularinvestor.com/germany-secretly-loves-greece-ecb-printing-presses/12084/

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