The spectacle never fails to impress. The clever economists shake their heads with concern and raise their index fingers in warning: the nations of the world are living beyond their means and the towering mountains of national debt are exceeding the threshold of comprehension. One hundred trillion dollars is what will have to be written on the world’s debt tower by the end of the year. The US, in particular, is running up debts as if there were no tomorrow.
When a global organisation like the International Monetary Fund (IMF) joins in, there is no stopping the neoliberal authors. In the FAZ, Gerald Braunberger makes the difficult-to-understand statement that the IMF’s wake-up call may be timely, but it still has the zeitgeist against it. Literally, the editor of the FAZ writes:
Shortly before its autumn meeting, the International Monetary Fund has warned of the mounting national debt around the world. According to its estimates, national debt is likely to exceed $100 trillion at the end of the year, which would correspond to 93 per cent of the economic output (gross domestic product) of all nations. The IMF is calling for a rapid but sustainable consolidation of government debt in order to avoid future debt crises with unforeseeable consequences.
The IMF has good economic arguments, but it still has the zeitgeist against it. The IMF’s wake-up call is uncomfortable but timely. When governments can no longer solve problems by spending large sums of money, they have to look for sensible solutions. This ultimately leads to better policy. Fiscal consolidations are difficult, lengthy and unpopular. But they are necessary.
The Austrian daily newspaper Standard also juggles with huge numbers on the same topic, but the authors cannot decide whether they should be merely shocked or also impressed by the dimension of the American debt economy. In 1990, the US national debt was still at 40 percent of GDP, but this year it will almost reach the historic mark of 100 percent. In Austria, they are certain that in view of developments such as those in the USA, nerves in Europe would be on edge, but the authors of the Standard do at least note what escaped the FAZ, namely that the USA’s ‘debt party’ also has advantages in the form of significantly higher growth.
Those who have not yet fallen off their chairs in the face of such threatening scenarios and the unimaginably large numbers should simply reflect for a moment. If the states of the world live above their means by 100 trillion, i.e. spend more than they earn, who exactly lives below their means, i.e. spends less than they earn?
The answer is terribly simple: the world’s private households and the world’s companies, taken together, are living exactly 100 trillion below their means, because the world as a whole cannot do more than live according to its means, and there are simply no other actors.
To arrive at a well-founded judgement of the national debt, one needs to answer just one question: Did private households and companies save voluntarily, i.e. live below their means, or did the state force them to do so? The answer to this question is also not debatable: No one forces households and companies not to spend part of their income again, but to take it to the bank or to the capital markets and wait for interest to accrue.
But anyone who voluntarily puts their money on the capital market obviously expects there to be players there who are willing to live beyond their means, take out loans, invest the money borrowed and pay interest to savers out of the return on the investment.
But who should these players be on a global scale if both private companies and private households prefer to be on the saver side?
If the IMF’s wake-up call is opposed by the zeitgeist, then the zeitgeist is a clever guy (or girl, of course). On the other hand, anyone who considers the wake-up call to be in keeping with the times has failed to understand either the signs of the times or fundamental economic logic. The fact that the IMF can be accused of the latter shows that we must finally and completely break with the prevailing economic doctrine (as has been done here).