DW-TV: Mr. Gerke, you can probably tell us from a financial point of view what can we learn from history?
Wolfgang Gerke: We can learn a lot from history, but sometimes we forget to. I think a financial crisis is a little like a dangerous virus and we know how to fight the virus, but then we get a mutation. Then we have to relearn how to fight the new virus. If you take the policies of central banks in the past and at the moment, then I fear that we haven't learned from history. We are taking so much cheap money for all the investment bankers, especially in the United States, and money under the inflation rate so we are producing the next crisis.
The next crisis could perhaps lead to hyper-inflation here in Germany, like we've seen in the 1920s - is that a possibility?
It's a possibility but I don't think we'll go that way. For sure there are so many debts worldwide - in the US, in Greece, in Germany too - trillions. What will happen with all these debts, the next generation has to pay for all these debts, and that means we will pay with less good money. That means inflation. I have no fear that the euro will not stay, there are so many problems outside Europe that the euro will be a stong currency. The Chinese will want to have some euros, and not only the dollar in their portfolio, but the possibility to buy with euros will be influenced by inflation rates between 3 and 4 percent.
The situation in Greece, what difference would it make? I mean there are some experts who say that Greece should long have left the Eurozone and returned to their own currency. Would that make a difference?
We made a wrong policy in Greece. We pretended to save Greece and we were saving French and German banks. For sure they had difficulties and we had to do something, but it was the wrong way. We could help Greece with a haircut, we could help Greece with a time out from the euro, that would be more interesting for tourists coming to Greece, so we will have all these problems in the future and I see in the moment no real solution.
Let’ turn into another subject. When I don't pay my bills I get into trouble. At least when I don't pay them on time. Municipalities can wait. How is that possible?
That shouldn't be possible. Everyone has to pay their bill and if it's public money I think you have to be the first one who is paying the bills. But they try to save interest rates and they do so.
So they should be leading by good example. But it also has to do with the fact that they want to save money because they are in debt. They are heavily indebted, municipalities. How did that happen?
There are two ways to be in debt. One is, and that isn't acceptable, that you have the wrong management. We often have very poor professional management, but the other way is some have difficulties. They lost jobs and these jobs are outside perhaps even of Germany and one has to help them. But that's very expensive, so they try to do it another way, a not acceptable way.
And the way that you just indicate of course is that some of these municipalities turned to the financial markets, tried their luck speculating a bit with taxpayers money.
They tried to get very fast and easy money by speculating but this was a way into the casino. We must say that someone who doesn't know what he is buying in the financial market shouldn't do so. For sure there were some banks doing a good job for themselves there and they earned much money, but you cannot blame them, you have to blame yourself, and if you don't know what financial product you are buying, you shouldn't do so.
And especially if it is a financial product that is known to be quite complicated. Like credit default swaps. After the crisis they started to get into criticism, and they're still being traded. How come?
It's a quite complex financial product but you can understand it if you are a professional you learn the market, and therefore I would say don't do anything against products, but if you don't understand them you shouldn't speculate on long-term and short-term interest rates, that's dangerous if you have the unopen position.
Understanding money, handling money isn't always that easy. Can be complicated and that's why we've been living with debts for centuries. Are debts something that we will have to live with for the rest of our lives?
Yes we have to do so. It's not so difficult for someone my age, but my sons suffer that problem and we will get higher inflation rates.
Wolfgang Gerke, then let's take a look now at the current level of debt here in Germany. Let's take a closer look at the clock which keeps ticking: every second, debt is growing by 2,279 euros -- so since the start of our programme, the total amount of German debt has risen by over three and a half million Euros ! Sobering thought. The last one we have time for today. Wolfgang Gerke, thank you very much for joining us.
Interview: Monika Jones