The author is the chairman of the Bundestag and former German finance minister

“In the long run, we are all dead,” John Maynard Keynes wrote 98 years ago. He believes that during the crisis, it is necessary to carry out short-term economic intervention to stabilize the economy.New stimulus plan, including EU’s Post-Pandemic Recovery Fund, Are in line with this tradition. I’ve been in favor from the beginning-to some people’s surprise.

During my tenure as German Finance Minister, I had a Frugal reputation As a matter of principle. However, back then and now, my goal was sustainability: borrowing to stabilize the economy in times of crisis makes sense, as long as the issue of repayment is not forgotten. The need to repay debts in the future is often overlooked. Many governments focus on the “simple” part of Keynesianism—borrowing—and then postpone debt repayment. This has led to continuous expansion of sovereign debt. Sooner or later there will be inflation. Keynes saw this As the main threat, the reason is its potential to “subvert the existing social foundation.”

The value of currencies in many parts of the world, including the European Union, is under pressure.Here, there are more fiscal policies for debt financing than elsewhere Next to it are monetary measuresThe money supply in the Eurozone has increased substantially, but the increase in the volume of goods and services has not been adequately matched. This raises the inflation expectations of businesses and private households. In this way, the Eurozone may face the risk of currency depreciation, which may present an almost unstoppable dynamic.

Consumer price index exceed The ECB’s benchmark is “below but close to 2%”. Central bankers are not alone. Keynesian economists such as Larry Summers or Olivier Blanchard expressed regret over crossing the public debt red line and pointed to the increased possibility of uncontrolled inflation. In the real estate, stocks, and art fields, the dangers are already serious. The asset price index rose by 6.3% last year. In fact, the quarterly growth rate even reached double digits. A large part of the currency surplus caused by the European Central Bank is clearly invested in capital or real estate markets, and has contributed to speculative bubbles.

This is not just an economic issue. It also brings risks to the social structure. Most people who provide loans to the state are wealthy individuals and entities. Public borrowing increased their wealth and widened the gap between rich and poor.Cairns Have warned So that profiteers will become the object of hatred. Now, the gap between the “rich” and the “poor” poses a huge threat to social cohesion.

So we must go back Currency and finances are normal. The burden of public debt must be reduced. Otherwise, there may be a “debt pandemic” after the Covid-19 pandemic, with terrible economic consequences for Europe.As the population ages, if EU countries allow it, it will be difficult for them to compete with the United States and China in terms of productivity and competitiveness. Excessive debt Endanger their financial flexibility. Therefore, all eurozone member states must work to restore stricter budget discipline.

Experience has shown that countries with high debt levels can hardly achieve a balanced budget without external pressure. If left unchecked, the members of the state coalition are likely to succumb to the temptation to assume debt at the expense of the community. I have discussed this “moral hazard” with Mario Draghi many times. We have always agreed that, given the structure of the European Monetary Union, competitiveness and sustainable financial policies are the responsibility of member states.

I believe he intends to adhere to this principle as Italian Prime Minister.It’s important For Italy and the entire EUOtherwise, we will need a European institution with the power to enforce compliance with mutually agreed rules. This will require modification of the treaty. However, even without such amendments, the European Commission has assumed more importance in this regard.

One promising approach taken by Brussels is the Eurozone debt redemption agreement, similar to the sinking fund designed by Robert Walpole and Alexander Hamilton. As the first Secretary of the Treasury, Hamilton in 1792 instructed NSW to deposit good collateral, implement budget discipline and reduce debt. This is the crux of the often cited “Hamilton Moment”, not the debt commonality that is sometimes recommended to the EU.

The debt redemption plan worked, and it can work again today. It provides a “carrot and stick” hybrid strategy, as pursued by the International Monetary Fund-another legacy of Keynes. I believe that Europe will have enough wisdom to emulate British economists in this aspect of his doctrine.