The hammer inflation rate of 4.1 percent not only makes everyday life more expensive and savers poorer, it also makes the state richer.

“All debtors benefit, including the state,” says Jörg Krämer, Commerzbank’s chief economist, to BILD.

► The fact is: If inflation is higher than interest, the debts, like the corona loans, shrink by themselves. Tax revenue also gushes “when wages rise more strongly due to rising prices and employees slide into higher wage tax brackets,” said Krämer. That means: “cold progression”.

The taxpayers’ association is therefore calling for double income tax relief for 2022. Not by 1.5 percent – the inflation adjustment was so high so far – but by at least 3 percent. Otherwise, “the state would collect inflationary inflationary income taxes,” says taxpayer boss Reiner Holznagel to BILD.

The state is also one of the drivers of inflation: CO2 prices, VAT of 7 or 19 percent and building regulations make many things more expensive.

Instead of raising the key interest rate to counteract inflation, Philip Lane, Chief Economist of the European Central Bank (ECB) does nothing!

There is no reason for “monetary policy action”. Mockery for every saver whose retirement provision is melting away.

Commerzbank economist Krämer also sees the central bank as having an obligation: “The ECB must change course and present a plan to exit negative interest rates and mass purchases of government bonds,” he demands. At the moment, material bottlenecks as a result of the Corona crisis are the main drivers of prices, said Krämer.

Without action by the ECB, however, there is a risk of “real, permanent and significantly higher inflation” in a few years’ time.


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