It is time to face the truth: A worldwide recession, which also means sharp cuts in our country’s prosperity, is on the way from fear to certainty. Five reasons why.
Robert Habeck’s TV stammering should not only be understood as clumsiness, but above all as a storm bird of the coming disaster. The story of the baker who first bakes small rolls and then no rolls is the story of our time.
The recession that is coming is the most predictable economic downturn in world history. And yet fighting with tons of state money would not be desirable. The world, even if it sounds cynical, badly needs this recession. There are five solid reasons for this:
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1. The corona pandemic must heal itself economically. The problems of the Chinese with their lockdown policy, but also the globally tense and sometimes broken supply chains, cannot be undone by government economic stimulus programs. The economy must stabilize its own cycle again – in part by relocating supply chains. This will need time. The state can best stimulate the economy in this precarious situation by not strangling it with new taxes and regulations.
2. The consumer climate is clouding over – and rightly so. People know or sense very well that the actual energy price shock will only appear on their utility bills with a delay. The state should not numb people’s natural impulse to pause and buy less by injecting state money. This reluctance of the people is not a mistake, but a wise move. A supply shock like the one we are currently experiencing in the energy market cannot be neutralized by a surge in demand.
3. The central banks in Washington and Frankfurt are finally stopping flooding the capital market with cheap money and have started fighting inflation. That’s good news. All experts know about the connection: In an expanding economy, price suppression can never be organized. If you want to stop the devaluation of money, you have to reduce the money overhang now, noticeably raise interest rates and thus naturally dampen economic activity. In this respect, fighting inflation and recession are two sides of the same coin.
4. State resistance in the form of economic stimulus programs would only exacerbate the national debt crisis. New debt, which at best triggers a sham boom, would ultimately leave economies weakened. The permanent savior state is not a successful model for a prosperous economy. So: hands off the money press. You cannot buy your way out of this crisis.
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5. The stock market urgently needs this recovery phase so that it can once again fulfill its function as a reflection of future expectations and as the financier of future prosperity. Speculative excesses have turned the capital markets into a casino for many years. But they are not. In this respect, the reduction in prices and the re-measurement of the world based on fundamental data is the best prerequisite for a renewed upswing.
In spite of the smaller buns that are now being baked everywhere, we should not become miserable. Every recession is followed by an upswing like the sun follows the rain. Botho Strauss shows us the way to confidence in his biographical story “Origin”: “In addition, my arrival has taught me over the years that there are actually no fulfilled expectations. There is the disappointed expectation and all the beautiful things that happen unexpectedly.”