Germany first

The public Sector Purchase Programme (PSPP) launched by the European Central Bank (ECB) since 2015 partly violates the basic law, according to the ruling of the Federal Constitutional Court. This is a victory for the plaintiffs, which include the CSU politician Peter Gauweiler and the AfD founder Bernd Lucke. The court calls on the federal government and the Bundestag to “work towards a proportionality test by the ECB”. If this is not available within three months, the Deutsche Bundesbank may no longer participate in the PSPP.


What is behind the legal droning? The BVG judges that the ECB has only stated the target of a targeted 2% Inflation for the introduction of its purchase programme, but has not taken into account the consequences of the PSPP:

[..] The consequences of the PSPP also include economic and social effects on almost all citizens who are indirectly affected, for example as shareholders, tenants, property owners, savers and policyholders. For example, there are significant risks of loss for savings.[..] (» LPP - press release no. 32/2020)

In addition to the risk of loss of savings, the Karlsruhe defenders of the Basic Law also cite a second concrete Problem,

“[..] that economically in itself no longer viable companies …remain on the market due to the general interest rate level also lowered by the PSPP”[..].(» LPP - press release no. 32/2020)

The BVG is concerned, therefore, above all, that the financial assets of the Germans no longer drop sufficiently and that few profitable companies are still on the market, only so that weak economies in the EU can borrow money through the ECB bonds at lower interest rates. This is entirely in the line of the federal government that the southern Europeans could never be given money from German assets, which is why there must be a categorical no to Eurobonds. It is not admitted that these countries lie low above all because the ECB, under German pressure, is enforcing austerity programmes there that had already driven Greece into civilizational Ruin and are now pushing Italy and Spain into a corner.

The fact that there must be goals outside price stability for a monetary policy is an important as well as banal recognition. Nice that the BVG understands that now. However, the objectives that the Constitutional Court has in mind – namely higher interest rates and corporate profits and a thriving banking business – are not urgent, even harmful. It should be about how monetary policy can support the rights and interests of employees, tenants and small businesses.

In this sense, the bond-buying policy must also be criticized in principle. The goal of making cheap money available for productive purposes and employment through purchases has been totally missed. The newly created money did not flow into material production, but caused the price increase on the stock and real estate market. While gross domestic product growth in Germany fell from 2.2% to 0.6% between 2016 and 2019, share prices rose by 40% over the same period. The ECB’s bond purchases have not increased the real wealth of society, but have inflated the financial assets of the rich.

The BVG judgment must be vehemently rejected, but not in order to justify the ECB policy, but we must try to arrive at a European policy where economic, monetary and monetary policy intertwine and Europe becomes a political entity that truly connects all regions and peoples democratically. The main elements of this new reality Europe has been known for years and still not realized:

The “Barroso Commission” already presented such proposals in 2012. The plundering of the economically inferior “partners” was more important to German politics than the creation of a Democratic, viable European “unity”. Thoughts that apparently do not even come to the Federal Constitutional Court.