Wednesday, June 3, 2015

More Macro Nonsense

Germany’s birth rate has collapsed to the lowest level in the world and its workforce will start plunging at a faster rate than Japan's by the early 2020s, seriously threatening the long-term viability of Europe’s leading economy.

“No other industrial country is deteriorating at this speed despite the strong influx of young migrant workers. Germany cannot continue to be a dynamic business hub in the long-run without a strong jobs market,” warned the [World Economy Institute].

What happens (or should happen) when a person of prudence contemplates aging and retirement?  Usually, saving for retirement is offered as wise counsel – we are pummeled with reports of the lack of retirement savings by individuals.  It seems Germany, nationally, is walking along a similar path – at least this is the interpretation offered by the author of the subject article, Ambrose Evans-Pritchard:

The demographic crisis explains why Germany is so determined to run a budget surplus and drive down its public debt ratios, hoping to avoid a Japanese-style debt-trap before it is too late.

Sound practice for the micro; is it considered sound practice for the macro?

The IMF says Germany would do itself and the rest of the eurozone a favour by spending more to prepare for its old age, not less.


Macro-economics, as currently practiced, is – on every level – nonsense.

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