German fiscal policy vindicated

And since German politicians have insane views on fiscal policy, they will probably say that the current experience actually validates their prior two decades of excessively tight fiscal policy. In reality, the current situation mostly shows that Germany wasted an opportunity to take advantage of a prolonged period of negative interest rates to create a national high-speed rail network³ and to make massive investments in home insulation.

That is from a Matt Yglesias Substack, gated but worth paying for.  I agree Germany should have spent more on home insulation, but there are several ways of doing that in terms of the macro fiscal picture.

The broader point is that the current situation does in fact validate Germany’s prior two decades of tight fiscal policy.  I think most of us agree that you should run budget surpluses in relatively good times, and budget deficits in relatively bad times.  It now turns out those were in fact the relatively good times.  The Germans worried that might be the case, and now it turns out they were right.