For Yellen, Germany is very stingy

AUnder the Biden government, the US Treasury Department maintains its critical view of the surplus of German economic policy and services: in absolute terms, no country has a large surplus ($ 284 billion), even if the epidemic primarily prevents exports. Janet Yellen Head of Department in a recent report on the economic and monetary policies of key business partners in the United States.

The ministry sticks to its usual assessment: Germany’s cheap monetary policy restricts consumption and investment.

The authors attest that domestic demand stimulated growth between 2015 and 2019 and gradually reduced the current account surplus, although not for the long haul. The trade surplus with the United States in 2020 was $ 57 billion, compared to $ 67 billion in the previous year, the report said. The authors cite the International Monetary Fund, pointing out that Germany has a much larger current account surplus than is desirable and justified by economic trends.

Swiss currency policy in view

They appreciate the cost-effectiveness of mitigating the virus crisis: VAT reduction and suspension of credit break are temporary but steps in the right direction. However, such short-term measures are not enough to overthrow Germany’s overly conservative budget policy.

The German government has been targeting black zero since 2014, but higher revenues and higher spending generated a surplus of 1.2 percent of GDP during this period. Americans recommend using substantial financial space to reduce taxes on labor and increase investment.

In its half-year report to Congress, the Treasury Department monitors whether key trading partners have manipulated their currency to the detriment of the United States and whether their economic policies are contributing to the imbalances. Switzerland, Vietnam, Taiwan, India and Singapore have unilaterally weakened their currencies due to currency interventions. Switzerland, Vietnam and even Taiwan meet all three requirements set by the Ministry to classify countries as currency handlers: stable substantial monetary interventions, higher trade surplus with the US and clear current account surplus.