Merkel schools Obama

President Barack Obama is getting an economics lesson from German Chancellor Angela Merkel:

Chancellor Angela Merkel championed German export strength as “the right thing” for her country, spurning President Barack Obama’s call to boost private spending as both leaders prepare for Group of 20 talks.

Merkel, addressing a business audience in Berlin today, said she told Obama in a phone call that cutting government debt is “absolutely important for us,” exposing a second point of contention ahead of the June 26-27 G-20 summit in Canada.

Reducing the budget deficit by 10 billion euros ($12 billion) per year “won’t put a brake on the world’s economic growth,” Merkel said, relating what she told Obama yesterday. Germans are more likely to spend money if they feel the government “is taking precautions” to ensure solid finances, she said.

While Obama is urging countries in the G-20 to spend, spend, spend. Merkel is basically saying that spending more money, or the Keynesian tactic of “stimulating” the economy through deficit spending, will only set Germany up for failure in the future.

Accepting fiscal advice from the United States is like going to a drug dealer to break a heroin habit.


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