How Germany Destroyed Its Economy And How To Fix It [Video]

Authored by Daniel Lacalle,

The German economy was once a global industrial powerhouse, showing a strong resilience in times of crisis as well as significant productive growth in periods of expansion.

Germany displayed robust industrial activity, solid productivity, and enviably low unemployment levels, which added to real high wages. However, in the past five years the economy has stagnated, and its GDP is 5% smaller than the pre-pandemic growth trend suggested, according to Bloomberg Economics. Even more worryingly, they estimate that four percentage points of that loss may be permanent.

Most analyses blame the weakness of the German economy on higher energy costs and the Chinese slowdown affecting its exports. However, the reality is more complex.

Germany’s stagnation is self-inflicted.

Germany made its first big mistake in 2012, when its leaders accepted the left-wing diagnosis of the European debt crisis, which blamed all problems on inexistent austerity.Germany embraced inflationism and, in 2014, agreed to the same monetary …