Public Debt and Shifting of the Debt Burden from One Generation to the Next. Further Considerations: Do Outright Monetary Transactions (OMT) Comply with the EU Treaty?

Abstract

In connection with the immensely increasing public debt both within the European Union and in other leading industrial countries of the world, reproaches are made again and again that this constitutes also an increasing burden for the future generations of the population of these countries. Such generalizations are wrong, however. Objective treatment of this problem requires differentiated consideration. We should keep public debt owed to domestic creditors (internal public debt) strictly separate from that owed to foreign creditors (international public debt) in these countries regardless of whether the creditors are natural or legal persons. Where does monetary policy end and fiscal policy begin? These issues are currently subjects of heated disputes and controversies. There is no general answer for them and also courts cannot decide them. Answers can in principle be found only in a specific situation and by taking into account specific macroeconomic framework conditions.