World must go back to ‘sound policies’ - Jean-Claude Trichet

Developed countries must stick to sound policies of not spending more than they earn, which has little to do with austerity measures, former head of the European Central Bank Jean-Claude Trichet said in an exclusive interview to RT.

­“What is called austerity very often is only that instead of spending much more than you earn, you spend a little more than you earn – but it is still spending more than you earn,” laughs Trichet. “How can you call that austerity?”

For all advanced economies, austerity measures are part of correcting the economic trajectory, particularly with fiscal policy, Trichet, who headed the ECB between 2003 and 2011, points out.

“When you have had a tendency to spend more than you earn over a long period of time, whatever you do, in whatever continent you are, in whatever category of country you are – you have to correct. You cannot continue eternally to spend more than you earn,” Jean-Claude Trichet stated. “This is true for a country, as well as individuals or firms.”

Trichet noted that once given – sometimes in excess – money is hard to get back, because it is in people’s nature to keep the obtained, so austerity is always painful.

All the advanced economies of the world must undergo a transformation, believes the former head of the ECB. 

“We have to do the job. There is no time for complacency. Nobody should be complacent. It is true for all of us, without any exception,” Jean-Claude Trichet said.