Summer School on “Modern Monetary Policy and European Macroeconomics” (Maastricht, July/August 2023)

31 July – 4 August, 2023 | University of Maastricht, Netherlands

  • ECTS credits: 2.0
  • Coordinator: Dr. Dirk Ehnts

Modern Monetary Theory and European Macroeconomics

This course provides an introduction to Modern Monetary Theory (MMT). During the course, students will examine the balance sheets and transactions that are relevant for understanding modern money, with a focus on the Eurozone. Furthermore, alternative explanations are brought forward that include, among others, the idea that governments spend first and collect taxes later. This is the 7th edition of the class, with the last one scoring around 9.0/10 in the evaluation of last year. The course is open to students of all disciplines as well as non-students. No prior knowledge of economics or monetary theory is needed. Lectures are scheduled for mornings.


  • Knowledge of central banks and monetary policy
  • Understanding the operations of the Treasury and fiscal operations
  • Grasp of the credit creation and clearing process in the banking system
  • Ability to aggregate balance sheets in order to use sectoral balances as a tool for macroeconomics
  • Insights on the economic history of the eurozone, its crisis and possible remedies

Recommended literature: Ehnts, Dirk. 2017. Modern Monetary Theory and European Macroeconomics, Abingdon: Routledge (ISBN hardcover and ebook: 978-1-138-65477-8 and 978-1-315-62303-0)

  • Instruction language: English
  • Prerequisites: none
  • Teaching methods: PBL
  • Assessment methods: written mid-term exam, final paper 

Link the summer school is available here. Application for the summerschool can be made here.

Application Deadline: 1 July 2023

Posted by: Dirk | September 9, 2021

2nd International European MMT conference

Next week, the 2nd International European MMT conference will take place online. We start on Monday, Sep 13, with keynote speeches by Warren Mosler, Alla Semenova, Randall Wray and Zdravka Todorova. Tuesday we’ll have panels on unions and demand policy, inequality, Green New Deal and the political economy of fiscal policy. On Wednesday, we will have presentations by academic scholars. More information can be found on the conference website We will post links to Youtube soon. No registration is necessary except for the academic presentations on Wednesday. We will announce shortly how registration will happen and when.

Recently, MMT has gained a lot of attention because, according to The NY Times, “[I]f you happened to be watching C-SPAN’s “Washington Journal” on June 17, you saw a remarkable display of Modern Monetary Theory’s political influence. Representative John Yarmuth, Democrat of Kentucky, who is the chair of the House Budget Committee, gave a full-throated defense of the deficit-friendly theory to Washington’s sometimes skeptical viewership.”

I wrote this tweet because I thought that it would be really interesting for students to ask that question. They would find out what it is that determines the price of a government bond. Little did I know that many people would be interested in my view of the issue. So, by popular request, here is my take. (It is based on my book on money creation in the Eurozone [€] and a paper in the Eurasian Economic Review [no paywall] with Michael Paetz.)

Let us start with the figure that dominated the Bloomberg article I quoted [if you already understand the relationship between bond price, interest rate and yield you can skip the section and move to where I repeat the question from the title of this post]:

What we have here is the spread on Greek 10-year bonds over bunds (German government bonds, Bundeswertpapiere in German, short: bunds). A spread is a difference in yields, which are measured in basis points. There are 100 basis points in 1%. Or 1 basis points equals 0.01%. Such a difference might seem small, but bond markets are huge and we are talking about billions of euros sometimes. Even 0.01% (=1 basis point) of that is not negligible.

What is a yield, then? To understand that, we need to know what government bonds are. They are I.O.U.s (I owe yous), instruments of debt, promises of (future) payment. Government bonds are usually issued by the Treasury, which belongs to a government. They contain information about how much will be (re)paid, when and with what interest rate. 10-year bonds have a maturity of ten years, and this is what we are dealing here. (That does not mean that it is different for bonds of other maturities.)

So, the bond contains the information that they will be repaid at some point in the future, say 2031. The bond also contains the principal, which is the amount that the holder will receive at maturity (in 2031). Last but not least there is the interest rate that is paid no the principal. It is normally fixed, but variable rates are possible. In the Eurozone, Greek government bonds usually have fixed rates. All that information is fixed when the bonds are issued. After that, only their market price can change. This is where it gets interesting.

Let’s say we look at a Greek government bond which pays out €100 million in 2031. The interest rate it carries is 0.75%. This means that if the holder of the government bond would wait until 2031, she would receive €107.5 million (principal of €100 million plus ten years of interest of 0.75% of 100 million, which equals 7.5 million). The yield of this bond (which is *not* what you see in the figure above – that’s the spread) is determined by the market price of the government bond. So, what would be the market price of this bond?

The answer is €99.185 million. Why? Because that’s what it is right now (link to CNBC). The yield is 0.835%. It is higher than the interest rate of 0.75% because you can buy the bond at less than €100 million. Now the difference between that yield and that of a similar bond from Germany – the bund – is what you can see in the figure above. It reached almost zero in 2019 (before the pandemic), then went up somewhat and came down again. It is now below 100 basis points (or 1%) as the figure says. However, that was not the case in the years following 2010.

Why are Greek bonds a success story today while they were not in the Euro Crisis that started in 2010?

In 2010, investors thought that the Greek government might run into trouble. In the aftermath in Global Financial Crisis (GFC), tax revenues in Greece collapsed as economies everywhere stalled. In the Eurozone, of which Greece is a member state, the countries hit hardest were those with the real estate bubbles: Ireland and Spain. These were the main causes for the European side of the GFC. The collapse in real estate investment lead to high unemployment and this spilled over into the European economy as Spaniards and the Irish more or less stopped buying machines and cars from other European countries, like Germany.

Investors thought that the Greek government might run out of money and not be able to pay back the principal when their government bonds mature. Or, the Greek government might force investors to swap their old bonds into new bonds that pay out only half of what was agreed. When investors think that way, they will sell Greek government bonds. If they don’t do the same with German government bonds, this will result in a rising spread. This is what you see above. Investors thought that the Greek government might run out of money and that finally happened. Enter the Euro crisis, or European Debt Crisis, as Wikipedia has it.

By the way: the way the Eurozone works a government usually spends money via its national central bank. When it executes payments of the government, it marks up the receiving banks account at the central bank (reserves) which then marks up its client’s account (bank deposits). However, in the Eurozone it is not allowed that national central banks “finance“ (read: execute payments for) the national government. So, central banks do create reserves when its government spends, but the account has to revert to zero by the end of the day. This means that the government starts the day with zero euros in its central bank account and then it is driven into negative territory by government spending. I have described the details for Germany in a working paper, probably the Greece fiscal-monetary nexus is not that different.

How does the government get its account back to zero? It can move tax revenues there and also bond revenues. If tax revenues are not enough, then the question whether a government can spend only depends on its ability to sell bonds. If nobody wants to buy bonds, the government’s account will not revert to zero and this will give the central bank a red light. It is not allowed to spend for the government. That does not mean it cannot, of course. It clearly can still mark up accounts of the banks inside its jurisdiction. It won’t do that because it is against the Eurozone rules.

So, what is different today? Why do investors believe that the Greek government can sell all these government bonds? There is only one reason. The ECB changed its mind about its role. While it did not buy Greek government bonds in 2010 and after, now it does. In March 2020 it announced the Pandemic Emergency Purchase Programme (PEPP). Here is what the ECB says (my highlighting):

The PEPP is a temporary asset purchase programme of private and public sector securities. The Governing Council decided to increase the initial €750 billion envelope for the PEPP by €600 billion on 4 June 2020 and by €500 billion on 10 December, for a new total of €1,850 billion. All asset categories eligible under the existing asset purchase programme (APP) are also eligible under the PEPP, as well as a waiver of the eligibility requirements has been granted for securities issued by the Greek Government.

So, the ECB has decided to buy up Greek government bonds. This changes the calculation for investors. If they can expect to sell their Greek government bonds to the ECB at any time at the market price, it does not matter anymore whether the Greek government runs out of money or not. Before that would create a problem, the investors would already have sold her bonds to the ECB! This is why investors are happy to hold Greek bonds now and not ten years ago. It is the support of the ECB that does it. What also helps is that the deficit limits of the Stability and Growth Pact are deactivated for now.

So, Greek government bonds are a success story today because the ECB now supports the liquidity and solvency of the Greek government (and the other national governments) which it did not in the 2010 Euro Crisis. Since the PEPP is not permanent, this is where we are today. What tomorrow brings will be decided by the European policy makers at both supranational and national level and by the Europeans, who get to vote on some of these issues and determine who is in charge.

I have been re-reading the Functional Finance and the Federal Debt paper this afternoon. There are crucial differences between Functional Finance Theory (FFT) and Modern Monetary Theory (MMT). Therefore, it (MMT) was not all in Lerner. Let me comment on FTT from an MMT perspective.

The start of the paper is very promising:

“In recent years the principles by which appropriate government action can maintain prosperity have been adequately developed, but the proponents of the new principles have either not seen their full logical implications or shown an over-solicitousness which caused them to try to save the public from the necessary mental exercise.”

However, the next sentence contains the first “problem” (my highlighting):

“Many of our publicly minded men who have come to see that deficit spending actually works still oppose the permanent maintenance of prosperity because in their failure to see how it all works they are easily frightened by fairy tales of terrible consequences.”

“Deficit spending”? This is awkward from a MMT perspective. The government – often via its central bank – is the issuer of currency. It just spends. It cannot deficit spend just as it cannot surplus spend. Making payments, it is technically irrelevant whether the public budget is in deficit or surplus. The government spends by having the central bank mark up the accounts of the receiving banks, which then create bank deposits for their customers. That is it. There is no “plan B”. The government, however hard it tries, cannot “finance” itself.

It is wrong to believe that government spends differently when in surplus compared to spending while in deficit. There is no lever that is pulled when deficit spending begins. That should not be surprising. We don’t have real-time data on government spending and tax revenues. So, even central banks can’t say whether the government is in deficit or not when spending happens.

Lerner is correct to point out that fiscal policy “shall all be undertaken with an eye only to the results of these actions on the economy and not to any established traditional doctrine about what is sound or unsound.” That is what Functional Finance is for him and in terms of macroeconomics, MMT agrees.

MMT also agrees with Lerner that “taxing is never to be undertaken merely because the government needs to make money payments.” And we agree with the idea “that the government should borrow money only if it is desirable that the public should have less money and more government bonds” and that “this might be desirable if otherwise the rate of interest would be reduced too low”. We would disagree with the idea that a low interest rate would “induce too much investment, thus bringing about inflation”.

Lerner states that “any excess of money outlays over money revenues, if it cannot be met out of money hoards, must be met by printing new money”. That is quite the opposite of MMT. As a Post-Chartalist theory, we believe that the government spends first and taxes later. So, taxes do not fund the government. Instead, tax revenues is money that returns (French: revenu) to the state. The government always spends and later taxes and sells bonds. Logically, there is no other way. Lerner did not read Georg Friedrich Knapp’s “The State Theory of Money” nor did he get it through Keynes Treatise on Money (1930), it seems.

Later in the paper, Lerner writes that “the interest can be paid by borrowing still more”. According to MMT, the government does not borrow. It issues currency (reserves) and then offers to swap them for interest-bearing securities (government bonds). Since an interest rate is paid on reserves anyway (at least today), there is no difference between the state paying interest on reserves (or clearing balances) or government bonds. The Fed offers different accounts where banks can move their money, and that’s it.

Another problematic sentence is this: “As long as the public is willing to keep on lending to the government there is no difficulty…”. However, the logic that follows is sound. If the public does not want to buy government bonds, they can keep the money or spend it. If they keep it, the government does not have to issue bonds (as long as the money does not find its way into the money market, that is). If they spend it there will be higher tax revenues and the public debt will be automatically reduced. MMT does agree with this macroeconomic logic.

Later in the paper Lerner writes that “the interest on debt can be met by borrowing or printing money”, which is incorrect as I have already discussed above.

Summing up, FFT and MMT have some similarities, but differ in crucial ways. Both theories agree on some (but not all!) of the macroeconomic issues. However, the ideas about how the monetary system works when it comes to government spending are very, very different. Lerner does not embrace Chartalism, which is crucial for MMT. Therefore, those who think that MMT is the same as FFT will find that any discussion of MMT will be frustrating because the MMTers will reject the monetary theory of Lerner, which is neoclassical. Lerner speaks about “printing the money” which MMT rejects in the context of government spending. (MMT does not reject it in the context of supplying the economy with cash in the form of bank notes and coins.)

I hope that this article has made clear that debating MMT while having read only FFT will lead to frustration on both sides. The same goes for reading “only” Minsky, or Godley, or Keynes – MMT started as a balance sheet approach to macroeconomics and is based on logic. Just like humans do not derive from monkeys but share common ancestors, MMT does not derive from FFT but shares some common ancestors.

Posted by: Dirk | April 6, 2021

Who is lending to the British government?

The Guardian has published a question and invited other readers to answer it:

The chancellor has borrowed an unprecedented amount of money. Who is lending it to him, and where did they get it?
Sean Boyle, London

The answer from Andrew, Richard and Neil is a genuine MMT answer and I recommend reading it. It was also published in the newspaper.

Here is my answer:

The question as to who lends the UK government money and where they get it from can only be answered by looking at the balance sheets of the involved parties. The short answer to the question is this: The money that the government spends is created by the Bank of England (BoE) at the time of spending. It is credited to the bank of the receiver, which then has more £s in their account at the BoE. The money does not come from anywhere. It is just created in a spreadsheet managed by the BoE and entries are made with the help of a computer (which is where and how “they get it”). This means that the government creates money when it spends. It therefore does not borrow to spend. Political rules force the government to issue government bonds (gilts) that carry an interest rate that is higher than the banks receive when holding funds at the BoE. This means that banks find it profitable to use their reserves to buy gilts. 

The consequence of this is that government spending does not influence the rate of interest. This ensures that the BoE is at the same time executing payments for the government and able to control the interest rate in the money market. Tax revenues are what the name implies – the state’s money is returned (French: revenu). This means that the view that government borrows our money is factually wrong. It is the opposite: we need £s to finance our tax payments (and other expenditures), but the government has a monopoly on £s. It has chosen to let the BoE, which belongs to the state, be the issuer of currency. As the issuer of currency, it is impossible to “run out of money” whereas we as users of currency struggle to obtain what we cannot produce:  £s.

Posted by: Dirk | September 22, 2020

Post-Keynesian theory and reality

I have read a book review by Steven Pressman in the Journal of Post Keynesian Economics (JPKE). The book he reviewed is “Rethinking the theory of money, credit, and macroeconomics: A new statement for the twenty-first century” by John Smithin. I am sure the book is just as interesting as the book review, but I would like to focus on a single paragraph that shows a certain disconnect between Post-Keynesian theory and reality. Pressman writes on p. 8 (my highlighting in bold):

Finally, and most important of all, there is a practical problem. In an inflationary world the Smithin Rule makes sense compared to the Wray (1998, p. 87) Rule, which stipulates that central banks should set the nominal interest rate at zero and park it there. The problem with the Wray Rule, as Rethinking (p. 209) points out, is that with nominal rates set at zero, inflation will accelerate due to conflicts over who loses from rising prices. Monetary policy will not be able to stop this, as lower overnight loans by central banks lead to lower loan rates by banks and more spending. This contradicts Minsky’s (1982, 1986) argument that governments need to stabilize the economy, as opposed to increasing already existing financial fragility. In contrast, the Smithin Rule would require raising nominal rates in times of inflation to keep the real rate at around zero, thereby stemming inflationary pressures.

Living in Germany most of the time in this century, we have been living with a zero interest rates for quite some years now. Inflation has not accelerated even though or because the European Central Bank’s nominal main refinancing operations rate is zero. Why then would anybody chose to discuss the case of zero interest rates “in an inflationary world”? If we would live in an inflationary world, nominal interest rates would not be zero anyway. (I will not be commenting on the issue of real rates, which is a construct that I do not think useful. See this unpublished paper on MMT and DSGE models.)

Also, we have seen zero (or negative) interest rates in the US, Japan, Sweden, Switzerland and elsewhere. Inflationary world? Not ours. Pressman reads Smithin: “lower overnight loans by central banks lead to lower loan rates by banks and more spending”. A leads to B leads to C – this is a sound scientific theory. And we must reject it on empirical grounds:

In the figure, we see that lower [interest rate] overnight loans by central banks lead to lower loan rates by banks. So, A leads to B. But B does not lead to C, as we see: Lower bank rates do not cause more spending and then the inflation rate (black line) moves up. Investment does increase, but not unlike in situations when interest rates were not zero.

So, there is nothing magic about an interest rate of zero. Setting the interest rate at zero therefore does not cause “conflicts of who loses from rising prices” because prices don’t rise. Designing rules “for an inflationary world” seems like an odd thing to do in the 21st century, especially in 2020. We need rules for a deflationary world, a Keynesian world where monetary policy cannot do the job – reach full employment, price stability and sustainable resource management – and fiscal stimulus is needed all the time.

Smithin is right to focus on profits. Nathan Tankus had written about the Kalecki profit equation some weeks ago. It worth revisiting theory with a view to reality. One big question is how the financial side became so independent from the real side of the economy. Looking at profits, and especially capital gains, should lead to more insights about what has happened and why. Once there, we can start thinking about fixing the economy. Pressman concludes that his book review is “meant to inspire John to write a good deal more”. Certainly!

Originally published June 9th, 2020 in German here, translated with (free version)

This background article explains where the money for governments in the current crisis comes from and why, contrary to general expectations, the EU will probably not play a major role in this crisis.

The Western states decided relatively late to largely shut down public life in response to the spread of Covid-19 (coronavirus). For they knew from the outset that the near-quarantine would have far-reaching economic consequences. Since the health and economic future is completely uncertain and, for example, pubs and hotels are or were closed, the citizens hardly spend any money. Companies are foregoing investments, and entire industries are lying idle: Lufthansa had to cancel almost all flights, VW had to stop production in Wolfsburg. The workers are therefore unemployed, which makes the applications for short-time work benefits skyrocket. More people are already unemployed than during the Great Financial Crisis of 2008/09. The economy would collapse if the state did not intervene.

But how does the state get its money – and what money? Should national governments spend more? Or should the EU spend more money, and if so, how? The questions mix up monetary policy issues with political questions about the future of the eurozone and the European Union. In this text I will try to separate the two dimensions. To put it bluntly, the crisis will cause economic damage in the form of lost production combined with unemployment. This damage is real economic damage. Less goods and services will be produced and therefore consumed. Nevertheless, we are constantly hearing about the “financial costs” of the crisis. This view of things is fundamentally wrong. Costs are a business concept. They evaluate the consumption of production factors in production. But if less is produced, then there are no “costs”.

The “costs of the crisis” are, as I said, the loss of production and this cannot be “financed”. The demands to distribute the costs of the corona crisis fairly are therefore based on a misunderstanding. The same applies to the financing of the costs of the crisis. Here monetary concepts are confused with real concepts. If, for example, less taxes are paid as a result of the slump in production, then government deficits and thus government debt will increase. Nothing more will happen; the economy will also be able to live with higher deficits and higher national debt.

If necessary, we will have to override a few rules (e.g. debt brake or Stability and Growth Pact) and make a few new rules permanent (e.g. the ECB’s Pandemic Emergency Purchase Programme). However, it is by no means necessary to reduce public debt again in the wake of the Corona crisis. On the contrary: an increase in taxes for the broad masses would certainly drag the economy down even further. What is needed, then, are economic stimulus packages to rebuild the economy. It makes sense to focus policy on the issues of climate change, inequality, the welfare state and common goods and not, as in the wake of the last financial crisis, to promote socially undesirable products with a scrappage bonus.

There are two possible answers to the question at which political level the European economy will be stimulated again by increasing spending. On the one hand, nation states can increase their spending to help their citizens. The alternative is to increase spending at EU level. However, it should be noted that the EU budget is usually financed by remittances from the member states. Increasing the EU budget through higher allocations from the member states therefore does not seem to make much sense – why not simply increase government spending at national level instead of sending the money via Brussels?

An increase in EU spending therefore only makes sense if the money does not come from the member states. On the other hand, it is questionable whether the EU is even in demand. The EU’s principle of subsidiarity states that the level of regulatory competence should always be as low as possible and as high as necessary. So why should the EU spend money when the nation states can do just as well? This point has not been recognised in the political debate because, as explained above, there is a misunderstanding of the economic problem, after the costs of the crisis have to be “financed”.

However, there are political efforts to develop the EU into a United States of Europe. This would include a European ministry of finance (Euro Treasury), which would issue Eurobonds. The ECB would be able to buy these without limit, similar to national government bonds with the PEPP, and would thus turn the Eurobonds into permanently risk-free bonds. This would give Brussels the possibility to issue unlimited money, which would not be possible at national level (provided the PEPP is scrapped). At this point we would have the “crowning glory” of the EU as a result, the transition from a supranational authority dependent on allocations from member states to a real government with its own source of money (Eurobonds and ECB). Such a “coronation” in the crisis without a public discussion of the question whether such a construct of the United States of Europe is even desired by the population would confront us with problems of democratic theory. Our Basic Law, for example, is “eternal”. To what extent can Germany be a democratic and social country (GG §20) if its government spending is then de facto limited by the Maastricht rules and, in crises, the spending of the European Commission (then government) continues to rise while the spending of the German government continues to fall? This would be accompanied by a loss of competence of the nation states. This should be discussed publicly.

The current crisis presents us with the challenge of protecting our people from the Covid 19 virus while at the same time preventing the economy from collapsing. At the same time, politics is not at rest when it comes to climate change, Europe and other areas. In this article I would like to explain where the money for governments comes from and why, contrary to general expectations, the EU is unlikely to play a major role in this crisis.

Short-time working allowance instead of black zero

Up to now, Germany has repeatedly stressed the ban on state financing by the European Central Bank (ECB) and the 3% deficit limit for state budgets. Since Wolfgang Schäuble, the black zero has ruled in the Grand Coalition’s Berlin. Instead of standing for dilapidated infrastructure, lack of state innovation and investment, it should stand for sound budgetary policy. This is why citizens expected little from the economic policy of the German government and the German-dominated European Commission when the coronavirus crisis hit us. However, they are now providing comprehensive proposals for remedying the crisis of the century caused by health policy.

In this country, the short-time working allowance is a traditional crisis-supporting instrument. It is intended to help maintain existing work structures during the crisis so that they can be seamlessly reintroduced later. With the “0” short-time working allowance, the public sector provides a set of instruments that can be used to continue to pay wages (de facto unemployment benefit) under the conditions of merely suspended employment contracts. Anyone who loses his or her job for a few months thus retains his or her income.

The Federal Government expanded this set of instruments at the beginning of March. On 19 March it decided on additional grant and credit aid for small businesses totalling €40 billion.[1] For large companies, “unlimited” (quote from Finance Minister Scholz) credit funds are available through the Kreditanstalt für Wiederaufbau (KfW).[2] The Chancellor’s sentence applies that money should first be spent. Afterwards, one will see what has become of the black zero.[3] Until recently, she vehemently rejected investments in the ailing infrastructure even with negative interest rates for German government bonds.

Commission and ECB have learned

EU Commission President Ursula von der Leyen announced the suspension of the Stability and Growth Pact with its rigid 3 percent rule for new debt, paving the way for her former boss’ spending plans. According to the Commission President, her move means that national governments can pump “as much liquidity as necessary” into the economy. Only the new ECB boss Christine Lagarde initially put the brakes on, as she initially tried to distance herself from Mario Draghi and his “Whatever it takes”, which is not uncontroversial in Germany. The ECB is not responsible for the different interest spreads (i.e. the difference between the respective interest rates in comparison to Germany) on newly issued government bonds of the euro countries.

As a result, investors expected Italy to leave the euro. Italian interest rate premiums shot up and the euro crisis returned. Italy threatened to become the new Greece. The ECB immediately denied that Lagarde’s statements had been misinterpreted. The ECB announced that it would launch a €750 billion bond purchase programme in the tradition of Lagarde. On the basis of this Pandemic Emergency Purchase Programme (PEPP), the ECB buys government bonds from investors at market price until the money is used up. In doing so, it simply increases the selling banks’ balances with the ECB. This money is newly created, it is not tax money [4].

The so-called “issuer limit” is now also being reconsidered. This states that the ECB may not buy more than 33% of a country’s bonds. This detail was originally intended to allay fears that the ECB was carrying out quasi indirect monetary public financing. The ECB is now speculating that it would also abolish this limit: “To the extent that some self-imposed limits might hamper action that the ECB is required to take in order to fulfil its mandate, the Governing Council will consider revising them to the extent necessary to make its action proportionate to the risks that we face. “[6] With such a reform the ECB would send an important signal, because it could guarantee the solvency of all governments in the Eurozone.

On 24th April Italy decided to increase government spending by 55 billion euros. [8] The interest rate on Italian government bonds with a term of 10 years fell from 1.99% to 1.87% on that day and currently (28th April) stands at 1.75%. [9] This way the Italian government will not run out of money. The Italian government has already rejected money from the European Stability Mechanism (ESM), which was established in the course of the last financial crisis and whose loans were tied to conditions. The ESM is extremely unpopular in Italy and is perceived as an “instrument of fiscal torture”. A European “solution” is therefore neither necessary nor sensible. The national governments can easily get more money by simply spending more. The important question for the long term will be what happens after the crisis. The PEPP can probably not be taken back without raising the interest rates of some euro countries. It would therefore make sense to continue the PEPP permanently. Otherwise we would have diverging interest rates, high where the crisis is, and low where the economy is growing strongly. The ECB is unlikely to want to implement such a recipe for European disaster. The Commission can reinstate the Stability and Growth Pact once the economic recovery is complete – and that applies to the whole of Europe, not just Germany. This is where European policy is needed.

The cost of the crisis – it’s not about money

The German government has recognised that the costs of the corona crisis are not measured in money, but in the loss of real production and possibly even production capacity. These costs can be offset if increased government spending compensates for the loss of expenditure by households and companies. In this way, government spending maintains economic activity. However, if, as is usually claimed, the state had to rely on an increase in tax revenues to increase its expenditure, we might as well forget the matter. With its “counter-financing” through taxes, the state would deprive citizens and companies of precisely the purchasing power that it wants to give them through additional spending.

In the eurozone, too, the central bank ultimately enables the state to make payments. In contrast to the private sector, the euro states do not spend their money with credit balances in private banks, but only use credit balances in the respective central bank money accounts. In doing so, the ECB, together with the banking system, generates money. Either the banks borrow the money from the ECB or the ECB buys government bonds and thus creates it itself. The banks use this money to buy government bonds from governments.

The European Central Bank ensures that this cycle works. It can buy up existing government bonds and thus determine the price of government bonds on the so-called secondary market itself. In doing so, it rejects from the outset any thought of the possible insolvency of a euro state. Investors can always sell to the ECB at current prices. This reduces the risk of default to practically zero. As long as the ECB spends a lot of money on government bonds, this enables the euro states in principle to “pump as much money into the economy” as necessary. [10] A corona crisis does not require it – political will is enough.

The cycle of money

The ECB pumps money into the economy through two channels. First, it buys financial assets such as government bonds, thereby providing liquidity to the banks. If the banks hold a lot of money at the ECB, they can get a lot of cash for it. This prevents a potential bank run. Banks can also transfer money more easily to other banks, which increases confidence within the banking sector. On the other hand, the ECB makes it clear to national governments that they do not have to worry about going bust and can therefore spend more money. Only spending on goods and services directly generates demand, income and production.

The spending policy position in “German-speaking” Europe would be turned upside down. Here it is usually argued that financial markets control the interest rate premiums for government bonds, because otherwise the danger of inflation would get out of control. Governments would have to be prevented from promising good things to the supposedly underage people by means of additional spending. This additional expenditure would lead to inflation via higher money supply growth. That is why the financial markets watch over governments that are themselves democratically legitimised. This is a unique experiment. However, it did not work at all during the great financial crisis. First, the markets overslept the case of Greece. They reduced the ratings of government bonds far too late. As a result, falling prices of government bonds in the crisis countries caused both high interest rates and holes in bank balance sheets. Both exacerbated the crises there before austerity policy forced the states to make further cuts in government spending.

As a result of the coronavirus crisis, the German state is probably spending more money (as of March 23, 156 billion euros are earmarked for this purpose), but at the same time it is generating less tax revenue. Political decisions lead to higher government spending. The German government gets money by deciding on expenditures. That is all, the rest is done by the Federal Ministry of Finance, the German Finance Agency and the bank of the state: the Deutsche Bundesbank. In post-war history, there has never been a case where a German government wanted to spend money and “no money was there”.

Why the state can create money…

The state is the creator of money. Its central bank manages the system of accounts of the banks. The federal government and other state agencies also have an account there. The whole thing looks like an Excel spreadsheet on which only the Deutsche Bundesbank is allowed to make entries according to its own rules. When the German Federal Government pays, the Deutsche Bundesbank increases the account balance of the bank it receives. For example, if the German government pays €1,000, the Bundesbank increases the account of Bank X by €1,000 via computer. This in turn increases the credit balance of its customer.

Government spending by the central government always creates new money. This money then flows back to them when taxes are paid. Modern money is nothing more than a tax credit. The state merely promises to accept its own money for tax payments in the future. The state cannot spend money that it has previously collected, just as I cannot use letters in this text that I have previously “saved” or otherwise “collected” somewhere. From this it follows that “taxpayer money” comes from the fairy tale world. So we taxpayers did not save the banks or the Greeks in the euro crisis. The source of the billions in payments to banks and governments was the central bank in interaction with politicians.

According to current political rules, the Bundesbank may only carry out transfers from the federal government if its account is “covered”. Both the tax revenues and the proceeds from sales of government bonds, which the Federal Finance Agency in Frankfurt am Main carries out on behalf of the Federal Ministry of Finance, end up in the “central account of the Federal Government”. In practical terms, this means that the government issues additional government bonds whenever its expenditures exceed its tax revenues. The requirement that government spending be “covered” by credit balances in the Federal Government’s account limits the Bundesbank, but does not change the technical process of posting credit balances. If this condition were to be overridden, the Bundesbank could therefore continue to cover the expenditures of the federal government unchanged [11].

… and why this doesn’t cause inflation…

If a government is not technically constrained in its spending, why does rising government spending not normally lead to higher inflation? For example, why don’t the Scandinavian countries with high government spending sink into hyperinflation? Why has Japan, with a national debt of well over 200% of gross domestic product, had a much better employment situation than the eurozone for decades and inflation rates that fluctuate around zero?

The correct answer to this question was given by the British economist John Maynard Keynes in his major work of 1936[12] Production, and thus GDP, depends on the total expenditure of the economy. Demand (expressed in money terms) determines the supply (of goods) and thus production. Employment depends on production. If production is high, employment is high; if production is low, unemployment is high. In a situation of under-utilisation of production capacities, more (government) expenditure leads to a higher supply of goods, as companies react to the additional demand. Under these circumstances, if too much money meets too few goods, the adjustment is not made through price changes (inflation) but through changes in quantity.

Inflation and wage growth

If at some point we all go back to work and the state demands more goods, then companies will increase their production due to the current under-utilisation. As a result, they will either lay off less workers or hire more workers. This will not put great pressure on prices or wages, so no increase in inflation is expected. Inflation does not depend on the money supply (however defined), but on the change in unit labour costs. Bobeica et al (2019) also came to this conclusion in their working paper at the ECB [13].

The logic is the following. Suppose wages grow by 4% in nominal terms and productivity by 2%. Companies will then produce 2% more and workers will spend their money to buy production. At the old prices, the shelves would be empty. So companies will increase prices so that they can sell everything and make higher profits. This would be the case if prices increased by 2%. The difference between the increase in wages and the increase in productivity can also be called the difference in unit labour costs. So as long as the state does not pay higher prices for goods or labour during the crisis, inflation is unlikely to rise.

Full employment and money creation

The state can thus ensure full employment by spending more on production and thus creating more employment[14] This can be seen quite clearly in the case of short-time work benefits. Here the state pays an income for which the recipients do not even work. Why then should the state not create jobs for those who have lost their jobs not because of the coronavirus crisis, but because of a continuing weakness in demand? The fact that there are more job seekers than jobs is not the fault of the unemployed. Furthermore, we cannot save on labour. Those who do not work this year will not be able to take up two full-time jobs next year. So it makes sense for the state to base its spending on the unemployment figures. Only when, as a result of full employment, wages and commodity prices rise will price stability slowly come under threat.

The problem in the eurozone is that some governments may not follow this logic. For example, the Spanish government is apparently planning to cut state wages by 2%[15] The money saved from these salary cuts is to be used for unemployment benefits, because the government expects higher unemployment in the near future. Here, a government accepts an increase in unemployment and refuses to support those affected. Instead of spending more money, government employees and unemployed people are played off against each other. Such economic policy measures are due to the euro and the prevailing ideology of the Swabian housewife. So the question arises in the euro zone whether we will see a further increase in inequality in the economic development of countries after the crisis. Italy, Spain and Greece would fall further behind without increased government spending, unemployment would rise significantly and social tensions would increase.

Since the Great Financial Crisis, the Eurozone has had significantly higher unemployment than the EU as a whole, than the US, the UK or Japan. This is undoubtedly due to the low level of government spending before, during and after the Great Financial Crisis. The EU has already recognised this and proposed a European Treasury in the so-called Report of the Five Presidents[16] By issuing Eurobonds it could use fresh money via the ECB to tackle the problems of Europeans. Meanwhile, the EU Commission President confirmed that Brussels would also look into “corona bonds” proposed by Italian Prime Minister Giuseppe Conte. In this case, euro countries would be jointly liable so that the interest rates of the bonds would be lower than those of crisis countries.

Government bonds will be repaid, government debt will not

A higher national debt is often rejected with two arguments. Both are based on equating the state with a Swabian housewife. The national debt, it is said, must be repaid at some point and therefore the state must also align its expenditures with revenues in the long term. In addition, government debt would burden future generations. Both arguments are wrong, however.

The national debt is calculated as the sum of the annual budget deficits of the state. A budget deficit arises when the state pays more money to the private sector than it withdraws from it through taxes. At the same time, the private sector generates a surplus of financial assets. If the government wants to reduce public debt, it must therefore reduce the surpluses of the private sector. It can only achieve this if it continually collects more tax revenue than it spends. Contrary to conventional interpretations, it is precisely the reduction of public debt that is a burden on citizens – and not the budget deficits, which add up to “public debt” and private financial assets. Depending on the distribution, of course, some are burdened more and others less – those who have nothing (much) can have nothing (much) or at least not much (not little) taken away from them. However, a reduction in public debt through higher tax payments means that not a single citizen has more money at his or her disposal.

When citizens or institutional investors buy government bonds, they simply exchange money for fixed-interest securities. When these government bonds mature, the central bank ensures that the government can pay back the money. The fact that the central bank must assume this role is a lesson from the euro crisis. The debt cut in Greece and the austerity policy were big mistakes that must not be repeated. The country has still not recovered from them. So the ECB has to ensure the solvency of the euro countries by buying government bonds worth hundreds of billions of euros, thereby signaling to investors that in the event of a crisis the ECB will give them their money back and that government bonds are therefore risk-free.

Government debt = outstanding tax credits

The “public debt” is therefore nothing more than the sum of tax credits owned by the private sector. They are a consequence of the public deficits of today and yesterday. In this context, high national debt means high financial assets – which does not sound so unattractive for future generations, especially at zero interest rates. [17] In Japan, national debt amounts to more than 200% of GDP. This ensures low unemployment and low inflation rates. The currency is strong, Japanese exports are in demand and the interest rate on government bonds is zero – what is the problem? Anyone who seriously wants to reduce government debt in Germany to zero has to explain who is going to pay the one-off special taxes totalling just under €2,000bn. The lower half of the German population has almost no assets.

Nonetheless, some are already trying to convert the supposed “monetary costs” of coping with the coronavirus crisis into political “reforms” that will further push back the welfare state and impose additional tax burdens on the working population. This neo-liberal policy dresses itself as usual in the narrative of the Swabian housewife. According to a draft law, from 2023 onwards, five billion euros in additional federal revenues are to be generated annually in order to reduce the additional debt that is now arising.[18] We can be curious to see what cuts in state spending and what tax increases there will be in order to carry out the reduction in private assets, which is probably counterproductive from an economic policy point of view, in favour of a reduction in state “debt”. Certainly “we” will have to tighten our belts, with the result that corporate profits will continue to flow.

What can we learn from the coronavirus crisis?

The question “How do we pay for this? “has just died. The money is unlimited, resources are limited. This insight will trigger the development of a new economy based on Modern Monetary Theory (MMT)[19] Now it’s just a question of what resources we use our money to solve our current problems and how we use them to develop future resources for future problems.

If we want to fight climate change with the Green New Deal for Europe,[20] eliminate unemployment in the eurozone by guaranteeing jobs,[21] raise taxes to protect democracy from the power of the super-rich,[22] or whatever problems we want to address – the question of state funding has been overcome. How do we pay for it? With our money. How do we do that? We access our resources and use them in a way that enhances the common good. It is time to gear the political system to our problems instead of arbitrary figures like the state surplus divided by the gross domestic product.

The Corona crisis is thus the beginning of an unideological understanding of the monetary system that, for the moment, is giving back budgetary sovereignty to the eurozone countries. With the additional expenditure that this will allow, active economic policy in the euro zone is once again possible. The exciting question is with what justification this wheel should be turned back again in the future and further in the direction of austerity – and whether this will succeed.

On the other hand, some political forces are trying to expand the EU in this crisis in the direction of a “United States of Europe”. Macron and Merkel have agreed by telephone that the EU should borrow 750 billion € from the capital markets. This is surprising, as the ECB can create money free of charge and without limits. The ruling of the Federal Constitutional Court on the ECB’s purchase of the bonds has also placed the entire European Union under reservation. At the same time, there are increasing voices on the periphery calling for an end to the “Euro experiment”. Spain, Italy and Greece are facing economic crises that will be harder than those that followed the major financial crisis of 2008/09, although Italy has not reached the GDP of 2007 again and Greece is even miles away. We are facing an epochal turn of an era. Understanding the monetary system is fundamental to being able to understand and classify the changes.


[4] The then head of the US Federal Reserve, Ben Bernanke, confirmed this in an interview with the programme “60 Minutes”. See
[5] The Bank of England is openly considering buying government bonds directly from the British Treasury. This would probably be “monetary public financing”. Cf.
[7] This would be an important point of an economic policy response to the coronavirus crisis, which Warren Mosler and the author have recently published. See


[10] Problems may arise from the deficit limits already mentioned and national debt brakes.
[11] As fewer government bonds would circulate, banks would have to hold more money in the ECB’s deposit facility, which would bear interest at a similarly negative rate as German government bonds.
[12] John Maynard Keynes, The General Theory of Employment, Interest and Money, 1936
[14] Dirk Ehnts and Maurice Höfgen, The Job Guarantee: Full Employment, Price Stability and Social Progress, Society Register 2019, 3(2): 49-65,
[17] When interest rates are positive, government bonds generate unconditional income for the holders of the bonds. However, they are not the cause of inequality today, because interest rates have been falling since 1980 and in spite of this inequality has risen to record levels during this period.
[19] Warren Mosler, 2017, The seven innocent but deadly frauds of economic policy and for the Eurozone; Dirk Ehnts, 2020, Money and Credit: A €-European perspective, 3rd edition
[21] Esteban Cruz-Hidalgo, Dirk H. Ehnts, Pavlina R. Tcherneva, Completing the Euro: The Euro Treasury and the Job Guarantee, Revista de Economía Crítica 27 (1 ), pp. 100-111,
[22] Emmanuel Saez, Gabriel Zucman, The Triumph of Injustice – Taxes and Inequality in the 21st Century, 2020

Posted by: Dirk | May 11, 2020

The disempowerment of markets in the euro area

Relatively unobserved by the media and experts, the establishment of the Pandemic Emergency Purchase Programme (PEPP) by the ECB has temporarily severely limited the power of the financial markets over national governments in the euro area. The challenge now is to make this permanent.

The ECB’s PEPP is a programme for the purchase of public and private bonds. 750 billion have been earmarked for the first time. The aim is to keep the interest rate premiums of the countries that are particularly hard hit, such as Italy, low. In order to achieve this goal, the ECB has been given great flexibility in the composition of its portfolio and has announced that it is also prepared to implement the programme “by as much as necessary and for as long as needed”.

A look back

Let us remember: in the so-called euro crisis, the ECB felt that it was not responsible for the solvency of the national governments of the euro zone. The solvency of some member states of the European Monetary Union (EMU) – such as Greece in particular, and later also Italy, Portugal, Spain and Ireland – was doubted by creditors. The country code PI(I)GS stood for the group of countries whose government bonds plummeted in price. This was the beginning of the narrative that the euro crisis had been triggered by the crisis countries themselves and not by wage dumping in Germany and real estate bubbles in Spain and Ireland, which were co-fired by German banks.

The problem was this; in a “normal” monetary system, the central bank, as the fiscal agent of the state, also guarantees the solvency of the state. The mechanism is very simple to understand. As a monopolist of the currency, a central bank can produce an infinite amount of money for free. It does this by, for example, buying government bonds from banks. To do this, it credits the banks with the corresponding amount in its account at the central bank.

The money that it spends in so-called “quantitative easing” or also in open market transactions is thus created “out of nothing”. It is not taxpayers’ money, and the central bank does not have to and cannot “finance” this expenditure. It is the creator of the money and, within the rules in force, it can simply increase the balances of the banks and governments’ accounts by typing in the relevant numbers on a keyboard.

Why can the state not become insolvent?

The national government can sell government bonds to banks and they can sell them back to the central bank. Since the central bank can spend an unlimited amount of money to buy government bonds, nothing can go wrong. From the creditors’ point of view, government bonds are risk-free securities. This makes them particularly attractive and banks are happy to buy government bonds from the government. This in turn enables the government to replenish its account with the central bank again and again – which also keeps it solvent.

If this construct still seems too shaky to you, you can oblige the central bank to simply increase the balance of a national government account by a few billion directly, as the Bank of England has just announced.

Since the state is democratically organised in our societies, we have set up our monetary system in such a way that the national government can spend as much money as it has budgeted for (and a little more). But in a state where the national government says we want to spend X and then can’t spend X, there is no democracy. It lacks monetary sovereignty, it lacks access to money, which is needed for government spending. And this money comes from the central bank, because only the central bank is able to create money.

The Corona crisis and the role of the ECB

In the euro crisis, creditors rightly feared that the ECB would not buy Greek government bonds for an unlimited amount. Then, of course, these bonds would no longer be risk-free, but there would actually be a risk of default. So the creditors have sold Greek government bonds. Since hardly anyone wanted to buy them, the price had to fall until supply and demand converged. But lower prices of Greek government bonds inevitably increased the yield of these bonds.

Let us now look at Italian government bonds with a maturity of 3 months. Their yield was around -0.3% to -0.5% until the end of February 2020. This means that creditors (banks) considered Italian bonds to be risk-free in the short term. As the ECB’s deposit rate is currently at -0.5% (with some exceptions), banks are therefore currently indifferent as to whether they “park” money with the ECB or use it to buy Italian government bonds with a 3-month maturity.

From the beginning of March they no longer cared. The prices of Italian government bonds fell, as creditors feared that the Italian state would become insolvent. Yields on Italian government bonds rose to 1% by 18 March. This was the day the ECB announced its PEPP. Creditors quickly understood what this meant: Italian government bonds were risk-free again!

Bildschirmfoto 2020-05-09 um 16.02.56


Figure 1 shows that the price of Italian government bonds then moved back down. We are not yet back to the February level, but if the ECB gets serious and buys a sufficient number of Italian government bonds, it will make their price high and pull yields down. The price of Italian government bonds fell as creditors feared that the Italian state would become insolvent. Yields on Italian government bonds rose to 1% by 18 March. This was the day the ECB announced its PEPP. Creditors quickly understood what this meant: Italian government bonds were risk-free again!

This time it’s different

In Southern Europe, including France, there are fears that the corona crisis will once again lead to being forced into austerity policies. However, as long as the PEPP is running, national governments in the eurozone can easily get into debt. They simply spend more money. They do not need corona bonds, Eurobonds or debt relief to do so. The ECB is aware of its role and is ready to play it:

“The Governing Council will do everything necessary within its mandate.”

This is the end of financial markets’ power over national governments. This is a very positive development that makes a repeat of the austerity policy after the financial crisis at least less likely.

The other problem that countries see is the Commission’s deficit limits. However, these have been suspended for the time being. It is up to politicians to adjust these two parameters – the stabilisation of the ECB’s PEPP and the abrogation of the deficit limits. We urgently need a broad public discourse on these issues to ensure that market fundamentalists do not turn the wheel back again.

Translated with (free version)

This article originally appeared in German on April 21, 2020, at Makroskop.

In today’s ruling, the Federal Constitutional Court upheld several constitutional complaints against the Public Sector Purchase Programme (PSPP), stating that the ECB’s decisions on the Public Sector Purchase Programme were incompetent, as the proportionality had not been assessed:

A public sector purchase programme such as the PSPP, which has significant economic policy implications, requires in particular that the monetary policy objective and the economic policy implications are identified, weighted and balanced against each other. Therefore, the unconditional pursuit of the monetary policy objective of the PSPP to achieve an inflation rate below but close to 2 %, while ignoring the economic policy implications of the programme, appears to disregard the principle of proportionality.

The necessary balancing of the monetary policy objective with the economic policy implications of the means used does not follow from the decisions which are the subject of this procedure. They therefore infringe the second sentence of Article 5 (1) and (4) TEU and are not covered by the ECB’s competence in the field of monetary policy.

In my opinion, this assessment is adventurous. A central bank has a big hammer – interest rates – and almost as big – the rules on what collateral is accepted for central bank loans. To be able to influence interest rates in the long term, a central bank buys and sells government bonds. In the euro area, this is done through resale transactions (so-called repos = repurchase agreements). This is fundamental – without trading in government bonds, the central bank cannot influence interest rates and yields. (Technically, it would be possible to set interest rates in such a way that the interbank market rate is set without the central bank buying and selling government bonds, but this requires that, in case of doubt, government bonds can be bought in large quantities by the central bank. This is not permanently fulfilled in the euro zone).

A central bank sets the short-term interest rate directly via the deposit rate, main refinancing rate (maturity: 1 week) and marginal lending rate (overnight). The economy adapts to this. I am not aware of a single example of a central bank where a trade-off takes place in the sense that side effects are explicitly discussed and weighed. Of course, monetary policy has an influence on distribution, public finances and wealth. But the Federal Constitutional Court misjudges the way a central bank functions. It sets an interest rate, which is difficult enough. There is the theory of the inflation target, according to which the interest rate of the central bank is aligned with the inflation rate, but this does not work. Inflation is too low. Since its inception, the ECB has only been able to influence the inflation rate – it does not control it. (More detailed information on these issues can be found in my book “Money and Credit: A € European Perspective”, 3rd edition, February 2020).

The side effects, which the Federal Constitutional Court sees, are sometimes hair-raising:

For example, there are significant risks of loss for savings. Companies which are no longer economically viable per se remain in the market because of the general interest rate level, which has also been reduced by PSPP. Finally, as the duration of the programme and the overall volume increase, the Eurosystem is becoming increasingly dependent on the policies of the member states, as it is becoming increasingly difficult to terminate and unwind the PSPP without jeopardising the stability of the monetary union.

Could the SNB please explain to the Central Bank at what exact interest rate ‘non-viable companies’ have disappeared? That is outrageous. Such an “equilibrium interest rate” may be haunting the minds of some errant economists, but that is not something that can be seriously advocated! What comes next? A lawsuit against government spending because it keeps “businesses that are no longer viable” alive? This approach presupposes that there is a balance in the economy and that it can be observed. I do not consider both of these conditions to be fulfilled. This argument should therefore be rejected.

Similarly nonsensical is the argument about the “significant risks of loss” of savings. Have the judges perhaps ever considered what happens to asset prices when the central bank buys assets worth several hundred billion euros from asset owners? Will stock prices and property prices rise or fall? Asked the other way round, does the Constitutional Court believe that an interest rate increase to 5% by the ECB will raise asset prices? To be honest, I see more than “significant risks of loss”.

Under the same condition, the Bundesbank is obliged to ensure a coordinated – also long-term – reduction of the holdings of government bonds within the Eurosystem.

As long as other national central banks of the Eurosystem then buy these government bonds or others, this is unproblematic for the continued existence of the euro. However, it is possible that the ECB’s PEPP will then make all eurozone government bonds risk-free and accordingly in demand – except for German government bonds. This would raise their interest rates, and Germany could even become the new Greece if the other central banks refuse to buy up German government bonds. But we are nowhere near that point.

Conclusion: economic ignorance has led the BVG to make a hair-raising judgement. If the ECB’s PEPP also becomes the target of a lawsuit, this could mean the end of the Eurozone.

Translated with (free version)

logoDas Bundesverfassungsgericht hat in seinem Urteil von heute mehreren Verfassungsbeschwerden gegen das Staatsanleihenkaufprogramm (Public Sector Purchase Programme – PSPP) stattgegeben.Die Beschlüsse der EZB zum Staatsanleihenkaufprogramm kompetenzwidrig seien kompetenzwidrig, da die Verhältnismäßigkeit nicht geprüft worden sei:

Ein Programm zum Ankauf von Staatsanleihen wie das PSPP, das erhebliche wirtschaftspolitische Auswirkungen hat, setzt insbesondere voraus, dass das währungspolitische Ziel und die wirtschaftspolitischen Auswirkungen jeweils benannt, gewichtet und gegeneinander abgewogen werden. Die unbedingte Verfolgung des mit dem PSPP angestrebten währungspolitischen Ziels, eine Inflationsrate von unter, aber nahe 2 % zu erreichen, unter Ausblendung der mit dem Programm verbundenen wirtschaftspolitischen Auswirkungen missachtet daher offensichtlich den Grundsatz der Verhältnismäßigkeit.

Die erforderliche Abwägung des währungspolitischen Ziels mit den mit dem eingesetzten Mittel verbundenen wirtschaftspolitischen Auswirkungen ergibt sich nicht aus den verfahrensgegenständlichen Beschlüssen. Sie verstoßen deshalb gegen Art. 5 Abs. 1 Satz 2 und Abs. 4 EUV und sind von der währungspolitischen Kompetenz der EZB nicht gedeckt.

Diese Bewertung ist meiner Meinung nach abenteuerlich. Eine Zentralbank hat einen großen Hammer – den Zins – und einen fast genauso großen – die Vorschriften, welche Sicherheiten für Zentralbankkredite akzeptiert werden. Um den Zins langfristigen beeinflussen zu können, kauft und verkauft eine Zentralbank Staatsanleihen. In der Eurozone passiert dies über Wiederverkaufsgeschäfte (sog. repos = repurchase agreements). Dies ist fundamental – ohne den Handel mit Staatsanleihen kann die Zentralbank Zinsen und Verzinsung nicht beeinflussen. (Technisch gesehen gäbe es die Möglichkeit, die Zinsen so zu setzen, dass der Interbankenmarktzins auch ohne Kauf und Verkauf von Staatsanleihen durch die Zentralbank gesetzt wird, aber dies erfordert, dass Staatsanleihen im Zweifel von der Zentralbank in großen Mengen angekauft werden können. Dies ist in der Eurozone nicht permanent erfüllt.)

Eine Zentralbank setzt den kurzfristigen Zins direkt über Einlagezins, Hauptrefinanzierungszins (Laufzeit: 1 Woche) und Spitzenrefinanzierungszins (Übernacht). Daran passt sich die Wirtschaft an. Mir ist kein einziges Beispiel von einer Zentralbank bekannt, bei der eine Abwägung stattfindet in dem Sinne, dass explizit Nebenwirkungen diskutiert und abgewogen werden. Natürlich hat Geldpolitik Einfluß auf Verteilung, Staatsfinanzen und Vermögen. Aber das Bundesverfassungsgericht verkennt die Funktionsweise einer Zentralbank. Diese setzt einen Zins, was schwierig genug ist. Es gibt zwar die Theorie des Inflationsziels, nach der der Zins der Zentralbank an der Inflationsrate ausgerichtet wird, aber diese funktioniert nicht. Die Inflation ist zu niedrig. Die EZB kann seit Gründung die Inflationsrate nur beeinflussen – kontrollieren tut sie sie nicht. (Genauere Informationen zu diesen Themen finden sich in meinem Buch  “Geld und Kredit: Eine €-päische Perspektive“, 3. Auflage, Februar 2020.)

Die Nebenwirkungen, welche das Bundesverfassungsgericht sieht, sind teilweise haarsträubend:

So ergeben sich etwa für Sparvermögen deutliche Verlustrisiken. Wirtschaftlich an sich nicht mehr lebensfähige Unternehmen bleiben aufgrund des auch durch das PSPP abgesenkten allgemeinen Zinsniveaus weiterhin am Markt. Schließlich begibt sich das Eurosystem mit zunehmender Laufzeit des Programms und steigendem Gesamtvolumen in eine erhöhte Abhängigkeit von der Politik der Mitgliedstaaten, weil es das PSPP immer weniger ohne Gefährdung der Stabilität der Währungsunion beenden und rückabwickeln kann.

Könnte das BVG bitte der Zentralbank erklären, bei welchem Zins “nicht mehr lebensfähige Unternehmen” genau verschwunden sind? Das ist hanebüchen. Ein derartiger “Gleichgewichtszins” spukt vielleicht in den Köpfen einiger verirrter Ökonomen herum, aber das kann man doch nicht ernsthaft vertreten! Was kommt als nächstes? Eine Klage gegen Staatsausgaben, weil diese “nicht mehr lebensfähige Unternehmen” am Leben erhalten? Dieser Ansatz setzt voraus, dass es ein Gleichgewicht der Wirtschaft gibt und dass man dieses beobachten kann. Beide Voraussetzungen sehe ich als nicht erfüllt an. Daher ist diese Argumentation abzulehnen.

Ähnlich unsinnig ist die Argumentation über die “deutlichen Verlustrisiken” des Sparvermögens. Haben die Richter vielleicht mal überlegt, was mit Vermögenspreisen passiert, wenn die Zentralbank den Vermögensanlagenbesitzern Vermögenswerte im Umfang von mehreren Hundert Milliarden Euro abkauft? Steigen die Aktienpreise und Immobilienpreise wohl oder sinken sie? Andersherum gefragt: Glaubt das Verfassungsgericht, dass eine Zinserhöhung auf 5% durch die EZB die Vermögenspreise erhöht? Ich sehe da ehrlich gesagt mehr als “deutliche Verlustrisiken”.

Unter derselben Voraussetzung ist die Bundesbank verpflichtet, für eine im Rahmen des Eurosystems abgestimmte – auch langfristig angelegte – Rückführung der Bestände an Staatsanleihen Sorge zu tragen.

Solange andere nationale Zentralbanken des Eurosystems diese Staatsanleihen dann kaufen oder andere ist das unproblematisch für den Fortbestand des Euros. Eventuell werden aber dann durch das PEPP der EZB alle Staatsanleihen der Eurozone risikofrei und sind entsprechend begehrt – nur die deutschen nicht. Damit würde deren Verzinsung steigen, Deutschland könnte sogar zum neuen Griechenland werden, wenn sich die anderen Zentralbanken weigern würden, deutsche Staatsanleihen aufzukaufen. Soweit sind wir aber noch lange nicht.

Fazit: Wirtschaftswissenschaftliche Unkenntnis hat das BVG dazu geleitet, ein haarsträubendes Urteil zu fällen. Wenn auch das PEPP der EZB Ziel einer Klage wird, dann könnte dies das Ende der Eurozone bedeuten.

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