Why #begrotingstekorten not a problem, but a solution. The higher Dutch #staatsschuld due to the corona crisis, is good for our country and for the economy of the eurozone. That writes economist and professor Coen Teulings in a new research. Prime Minister Rutte is meeting his Spanish and Portuguese colleagues today on the European Corona Emergency Fund. The issue of sovereign debt is undoubtedly addressed. 'If you have a lot of debt, you can grow a lot, and you can just spend that growth, 'says Teulings.

Faced with any claim must be debt
According to Teulings, the idea that debt is good goes against our intuition, but debt plays an important role in the economy. “You want to hold buffers and have a current account, but every claim must be subject to a debt. That's the government. We have too little debt in the euro area. '

You earn on debt
“Our national income grows by three percent in a normal year, and the interest rate is zero. Every year that debt is allowed to grow a little and you don't have to pay interest charges. So if you're so much to blame, you can grow a lot, and you can just spend that growth. As long as the growth rate of nominal income is higher than the interest rate, then you earn on debt. And that too goes against our intuition,” says the professor.

The Netherlands is missing 20 billion euros annually
According to Teulings, the Netherlands misses income if we do not increase the public debt. It is true that we agreed in Maastricht that the debt should be up to 60%, but according to the professor, this is an unfortunate agreement. According to him, that maximum can be increased to 80%. 'If you hold eighty percent, you could spend twenty billion more annually', says Teulings, who adds that we have to ask ourselves whether we have not gone too far in reducing our national debt.

Why budget deficits are not a problem, but a solution
Corona is debalancing public finances all over the world. But how bad is that? Professor Stephanie Kelton writes in her new book 'The Deficit Myth' that our fear of high public debt is overwhelmed. It sees budget deficits as the key to avert threatening social and ecological crises.

2020 is going to be swallowing for our Minister of Finance. Budgetary discipline is normally the main hobbyhorse of the Dutch government, the coronacrisis completely unbalanced Wopke Hoekstra's beloved 'household book'. Expenditure is on the increase, and tax revenues are on the contrary. The economical Netherlands expects a deficit of 68 billion euros, 8.7% of GDP by 2020.

Where do we pay that from? Are budget deficits of such magnitude sustainable? And should we fear hyperinflation in the future, because central banks finance the deficits by raising the money press?

These questions are central to the book The Deficit Myth by Professor of Economics Stephanie Kelton. The book, which was released in June, has been published in the Dutch bookstore since 9 July. With governments heading for budget deficits of record heights through corona, the book could not have been launched at a better time: Kelton is cracking the stubborn budgetary myths that hold our politics and economy in their grasp. FTM read the book and spoke to the author.


High government debt is good for economy