The new debt and deficit rules of the European Union (Stability Pact) have opened the gates to Schachtian policy in the stricter meaning of the word. The new rules, in fact, have put new military expenses de facto off budget, exactly the way Hjalmar Schacht did.
Hjalmar Schacht, Hitler’s central banker and economy minister, financed the entire rearmament of Nazi Germany off budget, by having a private company, Metallurgische Forschungsgesellschaft (MeFo), issue promissory notes, which were then discounted by Schacht’s Reichsbank central bank. In this way, the military buildup of the Third Reich occurred without formally increasing government debt.
The new EU Stability Pact (see EIR Daily News has re-introduced budget control rules, with mandatory reduction of debt and deficit for almost all countries, and has established a central “control account” to check deviation from fiscal policies. A procedure for excessive debt will be opened against countries that deviate from the expenditure pathway, with a few exceptions: on top of allowed deviations is defense spending, followed by so-called green or climate transition measures.
As the pro-EU news website Euractiv explained yesterday:
