Today’s world convulsed by the raging conflict in Ukraine, soaring inflation, rising interest rates and ongoing COVID-19 waves poses a tremendous challenge for humanity and economic activity. Liechtenstein is confronting this challenge with no public debt burden, with political and economic stability, and with military neutrality. We, Kaiser Partner Privatbank AG, are a 100% family-owned financial institution and a trusted partner to clients the world over.
In the European Union in particular, current geopolitical and economic developments are once again exposing the fragility of the euro and the disequilibriums and centrifugal forces within the Eurozone. The energy dependency of large countries like Germany and Italy not only makes the economy vulnerable, but concurrently also fuels political instability. In a multipolar world and against an ever more menacing geopolitical backdrop, the EU finds itself compelled to ramp up its military capabilities. At the same time, the energy transition needs to be pursued even more vigorously in the future.
In the face of multiple parallel crises, it is becoming clear that wealthier countries like Germany are not just in the spotlight at the moment, but will be asked to foot the bill in the future in one way or another. Economic stimulus packages, government aid for businesses, support payments for households, special military modernization funding, energy price caps, and more and more transfer payments to the EU – all of that costs loads of money and causes the existing mountain of debt to pile higher. At some point, probably sooner rather than later, a discussion will arise about who has to pay for all of the spending. The German Council of Economic Experts, the so-called “sages of the economy,” even has already spoken out in favor of raising the top marginal income tax rate and introducing an energy solidarity surcharge for top earners.
There are different conceivable ways to refinance the towering debt. One way is through higher taxes and wealth confiscation. Appeals for such actions have already been voiced and cannot be dismissed entirely because the cocktail of crises is bound to sharpen the divide between social classes, even within the rich countries of northern Europe. And so calls for greater income redistribution, particularly through a wealth tax, are also growing ever louder in Germany. However, wealth built up over decades is also being endangered by soaring inflation and an unstable euro. Last but not least, the drastic turnaround in global monetary policy makes liquid assets like stocks and bonds as well as illiquid ones like real estate vulnerable to value depreciation.
Geopolitical tensions, a looming recession and mounting uncertainties appear destined to cause the social and political climate to tend to worsen within the Eurozone and in Germany. When economic well-being and entrepreneurship become imperiled, it becomes more justified and necessary than ever to look for alternatives.
Liechtenstein presents one such alternative. The contrast between Liechtenstein and the troubled European Monetary Union could hardly be starker in the current crisis. The tiny country in the heart of Europe is an epitome of political continuity, stability and neutrality. Due to the exceptional situation of our particular location, we at Kaiser Partner Privatbank AG rely on thinking beyond borders. Throughout its history, the principality of Liechtenstein has always stood for innovation, liberty and entrepreneurship.
Kaiser Partner Privatbank AG, a 100% family-owned enterprise founded by entrepreneur and investor Fritz Kaiser, is a trusted partner to families, entrepreneurs and investors the world over. Founded in Liechtenstein’s capital of Vaduz in 1977, Kaiser Partner Privatbank AG has decades of experience in the field of investing with a focus on capital preservation and sustainability.
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