Star economist Paul Krugman criticizes the economic policy of Chancellor Angela Merkel in the New York Times. He demands a departure from her policy.
Ever since the refugee crisis in autumn 2015, Angela Merkel is used to being attacked. This time, however, the attack does not come from the expected candidates – the AfD, Horst Seehofer or the value union. And for a change, the reason is quite another: it's about the Chancellor's economic policy.
Paul Krugman is one of the most renowned economists in the world. His books are in the US bestseller, he is a columnist at the Great New York Times, In 2008, Krugman received the Nobel Prize for Economics. Now, in his column, he has criticized the economic policy of Angela Merkel – that's exactly what we know from US President Donald Trump. But he is not concerned with tariffs or cars that supposedly flood the US market. It's about the German fear of debt. "The world has a Germany problem" is the title of his text.
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Nobel Prize winner Krugmann: Merkel does not hurt the US, but Europe
"An obsessive fear of debt, which now threatens the entire global economy," the economist calls the German policy of "black zero". Krugman counters to Trump that Merkel would actually not harm the US with this policy – the German market is as open to US goods as it is the other way around. But: The lack of willingness to lend money, Merkel plunge the other European countries into a crisis.
Basically, Krugman is concerned with the so-called austerity policy that has determined German politics since 2010. At that time, Germany had imposed on Southern European borrowers to cut spending to reduce debt. Germany itself has gone the way of the "black zero". The problem: According to Krugman, austerity has reduced demand, which has led to an increase in unemployment across Europe. Krugman: "Europe suffers from a chronic lack of private demand. Consumers and businesses do not seem to want to spend enough money to achieve full employment. "The ECB has cut interest rates dramatically to boost lending and boost demand.
Angela Merkel also participates on Saturday in the G7 summit in Biarritz, France, where she will speak with Donald Trump, among others.
Nobel laureate Krugmann demands: Merkel only has to take the money
For Krugman, the solution to the employment problem is obvious: the federal government must finally take the money that the investment market wants to impose on it. Debt, invest and stimulate employment. There are many possibilities for this: "Germany's infrastructure has to be repaired and modernized in many places similar to those of the USA," for example, the US economist suggests.