by The EU-commission issued a tweet (below). Another step towards EU statehood. A large one. Since around 1500, access to credit was key for European (later: all) states waging war. The early development of central banks was intertwined with the history of national wars. Look here for the Wikipedia page on the history of the Bank of England -it literally starts with a ‘crushing defeat’ of England by France. Credit was needed to win. Government borrowing had to be enabled by central banks, the monetary system had to be able to function as a ‘weapon of war’. The ECB, however, is not allowed to provide credit to governments (even when it can keep interest rates low and make government debt ‘risk free’). And the EU is, or was, not allowed to issue its own bonds. A peaceful union. Which
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The EU-commission issued a tweet (below). Another step towards EU statehood. A large one. Since around 1500, access to credit was key for European (later: all) states waging war. The early development of central banks was intertwined with the history of national wars. Look here for the Wikipedia page on the history of the Bank of England -it literally starts with a ‘crushing defeat’ of England by France. Credit was needed to win. Government borrowing had to be enabled by central banks, the monetary system had to be able to function as a ‘weapon of war’. The ECB, however, is not allowed to provide credit to governments (even when it can keep interest rates low and make government debt ‘risk free’). And the EU is, or was, not allowed to issue its own bonds. A peaceful union. Which changed. There has been a lot of talk about Eurobonds, but suddenly they are there. And again war is midwife of change. Don’t underestimate this. The EU might as well aim to raise 800 instead of 80 billion Euro. Think trillions.
This of course has implications. The countervailing democratic power which can reign in the EU commission has to be massively enhanced, one way or another, even system as clumsy as a debt ceiling would be better than nothing. Work ahead. Also, it’s another unintended (to say the least) consequence of Putin’s invasion of Ukraine: a EU which is not more solidified than before but which on short amount can raise amounts of money which, as I see it and when need be, can equal total Russian GDP. It’s not a peaceful union anymore. The expected course of events (by me) is that the EU might take over funding of military spending of the member states to enable their NATO pledge of 2% of GDP spending on the military, aside of financing prestigious New Green Deal kind of programs. All of this requires more countervailing power, inside and outside of Brussels. The multipolar world came to be – with a tweet.