Germany always ends up opting for pragmatism over its ideological predispositions

One simply needs to read the initial European treaties to understand Germany’s ideological predispositions: They include strict fiscal rules that all euro-zone member states must adhere to (regarding actual and structural fiscal deficits and public debt); There is a “no bailout” clause: a euro-zone country’s return to fiscal solvency cannot be achieved with the help of the other countries or Europe; There cannot be monetisation of public debt or financing of fiscal deficits with money creation; Europe is not a “transfer union” in which public transfer payments are made to countries in difficulty. Yet all these rules stopped appl ying , with Germany’s consent, when it became necessary to overlook them in light of the economic and financial situation: Recessions and crises have led to the abandonment of the fiscal rules; Countries have been bailed out, in particular with the creation of the EFSF-ESM; Since 2015, the ECB has de facto monetised public debt in return for money creation; The European recovery plan and the SURE programme have clearly given rise to a “transfer union”, as the spending is concentrated in the countries that are struggling the most after the COVID crisis. Pragmatism always ends up prevailing over rules, even in Germany. This means that one should expect further pragmatic progress in the future , for example: European Union bond issuance ( eurobonds ) to jointly finance an increasingly wide array of public spending; ECB tolerance of inflation above 2% if it is necessary to continue to help governments finance large fiscal deficits.