_ J.C. Kofner, Economist, MIWI Institute; Spokesman, State Committee for “Finance and Taxes,” AfD Bavaria. First published in April 2025 in Krautzone magazine.
Introduction: The Republic’s Quiet Collapse
The Federal Republic of Germany is undergoing a fundamental transformation—not through mass protests, barricades, or coup attempts against the Bundestag, but rather through the self-congratulatory applause of the established political parties. On the Ides of March 2025, they paved the way for the largest expansion of public debt in the history of postwar Germany. This represents nothing short of a fiscal coup.
The founding fathers of Germany’s social market economy envisioned a lean and modest regulatory state. Yet, due to the institutional capture by the 1968 generation, this vision has been progressively replaced by a bloated welfare apparatus. Since the end of the post-war economic miracle in the early 1960s, public debt has risen from under 19 percent to more than 60 percent of GDP. Government spending now amounts to nearly half of total economic output—compared to just 34 percent in communist China.
From mass immigration to the energy transition to the pursuit of a “climate-neutral” economy, the leftist Leviathan continues its relentless growth. With the aid of power-hungry pseudo-conservatives and ideologically motivated left-green actors, it is encroaching upon all aspects of life. But like any planned economy, the woke transformation of society demands vast financial resources. So vast, in fact, that even near-record tax and levy revenues—amounting to nearly two trillion euros—have proven insufficient. The resulting fiscal overreach ultimately led to the implosion of the previous coalition government.
A Fiscal Coup in Three Acts
Anton Hofreiter may have been right in claiming that all of this was premeditated. Friedrich Merz, in this scenario, assumes the role of a cold and calculating Machiavellian.
- November 2023: The Federal Constitutional Court, comprised of judges nominated by the CDU/CSU, SPD, and Greens, upheld a complaint by the opposition CDU/CSU, ruling that the budget plan of the “traffic light” coalition violated the constitutional debt brake. The case targeted the use of “special funds,” a mechanism designed to circumvent the constitutional limits on new borrowing.
- November 2024: With all conventional budget tricks exhausted, Chancellor Scholz demanded that Finance Minister Lindner invoke an emergency suspension of the debt brake—this time citing the war in Ukraine as justification. Lindner refused, citing constitutional concerns, and in doing so triggered the collapse of the coalition government—likely in the futile hope of regaining the trust of former FDP voters. New elections were called.
- February/March 2025: Just one day after winning over a plurality of voters with explicit campaign promises to uphold the debt brake, impose fiscal discipline, and implement structural reforms, the CDU/CSU—under Merz’s leadership—executed what is arguably the most egregious betrayal of voter trust in modern German history. By all accounts, a textbook violation of Section 108a of the German Criminal Code (electoral fraud). In the final days of the outgoing Bundestag, a lame-duck majority comprising CDU/CSU, SPD, and Greens rushed through sweeping constitutional amendments: enshrining climate neutrality in the Basic Law, de facto nullifying the debt brake, and establishing another “special fund.”
In doing so, Mephistophelean Merz delivered the ultimate gift to the progressive political class, realizing what had previously been little more than fantasy among proponents of the Great Reset: more funding for the green transformation, more money for the transatlantic arms industry, more resources for citizen surveillance—and, of course, more profits for former BlackRock affiliates. Perhaps most insidiously, unpopular but necessary measures from the ordoliberal policy toolbox—such as fiscal restraint, deregulation, and competitiveness policies—can once again be postponed indefinitely. Après nous, le déluge.
The €1.8 Trillion Debt Bonanza: A Breakdown
There is considerable confusion surrounding the actual figures involved—some sources suggest €500 billion, others €1 trillion or more. My own analysis estimates the total fiscal expansion at approximately €1.8 trillion, composed of the following elements:
- €500 billion for a new “infrastructure special fund” to be spent by 2036. Predictably, this will be squandered on grid expansion, hydrogen development, and battery storage—the holy trinity of Germany’s energy transition dogma.
- At least 2 percent of GDP (over €90 billion annually) which the federal government will now be permitted to spend outside the debt brake for any measure vaguely linked to “civil protection.” This includes arms shipments to the eastern front, “anti-fascist” democracy programs against domestic “enemies,” and transformation subsidies aimed at preventing an “inevitable climate apocalypse.”
- €15 billion annually in additional borrowing capacity granted to the federal states (0.35 percent of GDP per year). Particularly the asylum industry stands to benefit, as Berlin—governed by the CDU—has already announced that it will use these funds for exactly that purpose.
Altogether, these initiatives represent an additional €147 billion in annual debt issuance, totaling €1.8 trillion over a decade.
In the first year alone, this debt-financed spending spree will raise the public spending ratio above 50 percent of GDP. Within ten years, the national debt-to-GDP ratio will climb to 90 percent—exceeding the Eurozone average. This does not even include implicit public liabilities, such as future pension obligations, which already amount to €14.5 trillion, or 3.5 times Germany’s annual GDP.
Inflation, Interest Rates, and Imminent Collapse
This new debt burden will not only cripple future generations, but also weigh heavily on current taxpayers. Annual federal interest payments are projected to rise from €34 billion to over €52 billion, an increase of more than 50 percent. Interest payments will consume more than one-tenth of the federal budget.
Following the announcement of this unprecedented debt package, yields on 30-year German government bonds surged by nearly 20 percent—signaling rising concerns over Germany’s creditworthiness. Deindustrialization and demographic decline will soon erode the country’s once-pristine AAA rating. Once the Eurozone’s anchor of stability, Germany is on the verge of becoming its next liability. A second European sovereign debt crisis appears inevitable. And once again, German taxpayers will be expected to bail out insolvent banks and governments across Southern Europe.
The most insidious form of taxation—newly printed money unbacked by real goods or productivity—will further fuel inflation. According to estimates by the DIW, the infrastructure fund alone will add 1.7 percentage points to inflation by 2027. Planned increases to the minimum wage—to €15 per hour—will add another 0.3 points, while the quadrupling of the CO₂ tax via ETS II will unleash a price shock exceeding 8 percent. Based on this trajectory, I predict in Krautzone that 2027 will witness a dramatic inflationary wave that will sweep away the current “SchuKo” (debt coalition). Until then, however, the woke fever dream will likely continue.
What Comes After the Debt Collapse?
So this is how the Republic ends. And then? Time will tell. The next beginning will be painful. But just as Germans managed to rebuild after 1918/23 and 1945/49, we owe it to our ancestors to rise again. One thing is certain: the next government must bring an end to leftist excesses.
A mere blue highlighter won’t suffice. What is needed is a chainsaw in the style of Javier Milei.