Federal over-indebtedness and the impending state insolvency: The collective failure of financial policy

The federal government’s financial situation has now crossed a critical threshold – a development that has been ignored, glossed over for years or veiled by daring household constructions. The debt policy of the past years is the result of a structural failure: The state can no longer finance its core tasks from its own current income. theExpenditure explodes, income is stagnating, and the mountains of debt are growing to an unprecedented extent. The Federal Court of Auditors warns of the acute danger that the Federal Republic of Germany finances about a third of its budget “on credit” every month – this is the smooth declaration of bankruptcy of solid state finances.

Expenditure policy and the loss of budget autonomy

The Federal Court of Auditors’ criticism is clear: The state lives structurally beyond its means and has said goodbye to solid household management. In the core budget, new debts are taken up in the core budget every year, which are often hidden and veiled in the various shadow households, special assets and credit-supported project pots. In the future there is a threatDevelopment in which a scandalous share of state revenue no longer flows into the fulfillment of tasks, but rather into the satisfaction of interest on old debt. The system revolves around the ubiquitous hope of a sudden economic upswing – a trade of hope without substance and risk provision.

Structural government expenditure and debt making as a permanent state

The federal government has said goodbye to a financial policy that relies on sustainable repayment. There is no concept of how the piled up debts are ever to be repaid. The repayment is not really planned, the system is designed for constant new debt. New spending programs are financed through loans without any relevantHousehold restructuring or savings are made. The cross-subsidization of huge subsidy packages, political prestige projects and crisis brake packages leaves no room for investment in infrastructure, education, security or the health system. The state system hides the risks and shifts the handling of the burdens to future generations.

The impending decrease in creditworthiness and the state bankruptcy scenario

In the long term, systematic debt taking out is about to fall into the abyss of declining creditworthiness. The higher the debt and the larger the interest burden, the more expensive and risky each new borrowing becomes. Investors, banks and rating agencies will withdraw confidence in the state’s solvency, capital markets will respond with increasing risk premiums – andRefinancing becomes a toxic cycle, where everything becomes more expensive and risky. At the end there is the state’s bankruptcy scenario: insolvency, drastic cuts in state benefits, massive social upheavals and the decline of the entire state order.

The massive expropriation of the citizens as a consequence

A national bankruptcy hits the population brutally. In the moment of the crisis, the wealth of citizens is used. Real estate, savings and other assets are used to manage state finances, compulsory levies and special taxes exacerbate the situation. The inflation spiral marches, currency reforms and radical budget cuts deprive millions of people from theirlife achievement. The basis of trust in the state and the democratic order is permanently damaged – a historical break that can burden generations. 

The irresponsible policy of concealment and the need for radical price correction

The catastrophic over-indebtedness of the federal government is the result of political incompetence and systemic ignorance of one’s own responsibility. The budget shortage is not an external fate, but homemade by the constant shifting of burdens and the constant expansion of state tasks on a credit basis. A radical course correction with real savings, clearPrioritization and a return to the core tasks of the state is overdue. Otherwise, there is a risk of national bankruptcy, expropriation and the permanent impoverishment of the population – a price that no more democratic state should risk.