Debt crisis: return on the Pompidou Giscard law (1973)

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by BobFuck » 06/11/12, 16:49

These journalists are stupid.

If we had continued to borrow from the Banque de France without interest (that is to say, to create monetary creation ex nihilo to finance our deficits), the politicards would have quietly continued to spend by financing all this with inflation (in other words, the impoverishment of all).

But the advantage of inflation is that it is visible, and that the resopnsable government jumps. Debt is invisible until it is too late (ie, now).
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by Christophe » 06/11/12, 18:23

As much I do not agree with your 1st paragraph (because impoverishment, or impoverishment, is very topical and that in advance this law it did not work so bad ...) as much I am with the second. .. : Mrgreen: : Mrgreen:
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by Remundo » 06/11/12, 19:37

It is good to remember the Pompidou-Giscard law, however, it should not be mocked entirely.

It appeared that the monetary creation entrusted to the States, through their "central" bank, partially or in full, led to inflationary policies (creating monkey money to cover deficits), as Bobfuck says, as well as to certain unfair economic practices between states in the form of competitive devaluations (hence the gradual construction of the € uro, heir to the European monetary snake).

Therefore, to sum up, we removed the right of monetary creation to States, which was often done without interest, to entrust it to private banks with interest, in the hope that the interest payable will slow down the use of loans and lead the States to more honorable management with better economic stability by reducing the volatility of currencies.

There was danger because if the states did not become virtuous, they engaged in a spiral of over-indebtedness while giving far too much power to private and undemocratic organizations ...

And it is clear that this has happened (the States have continued to balance deficit budgets structural for decades) and private banks have found an excellent deal there since they have acquired triple political, economic and financial power without any initial stake or constraint.

The system even reaches its limits because indebtedness, even limited to the sole payment of interest, is almost unsustainable for the majority of countries.

Currently, the ECB and the FED are making money at breathtaking rates and the machine is getting more and more self-wrapped every day. Mathematically, it's a big exponential.
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by BobFuck » 06/11/12, 20:54

Christophe wrote:As much as I don't agree with your 1st paragraph


Inflation is a tax on all of society ...

> hence the progressive construction of the € uro

This is the biggest mistake of all: never has a fixed exchange system between different countries worked. The euro allowed all the countries in question to borrow at very low rates, roughly at the rate of Germany, without risk premium, and the politicards were stuffed from where massive public debt. The deficit policies that have prevailed in various countries (Greece, Spain, France, etc.) should normally have led either to inflation / devaluation (which frees the socialists from power), or to an increase in interest rates ( which calms the heat). It was not the case, and now we see the result ...
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by Christophe » 06/11/12, 22:56

Uh it would be nice not to mix everything ...

The problem of the euro and fixed parity has little to do with that of the debt which would run well before the introduction of the euro ...

The euro may have worsened the crisis, but it is certainly not the originator. The economists who claim this are clowns ...

Also the dollar has functioned in the USA for "always" while there are strong economic disparities between the 51 states ... so?
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by Remundo » 06/11/12, 23:17

in fact, you are both right.

Debt is a mechanism that was put in place long before the euro.

And the euro has given access to money supply lent at low rates to States which have abused it. If the € uro is not the cause of over-indebtedness, we can say that it has amplified it.
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by Christophe » 06/11/12, 23:21

Remundo wrote: If the € uro is not the cause of over-indebtedness, we can say that it has amplified it.


Well, that's exactly what I just said, right?

I’m right! No but! : Mrgreen: : Mrgreen:
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by Remundo » 06/11/12, 23:29

or the art of consensual contradiction :P
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by BobFuck » 06/11/12, 23:41

Christophe wrote:The euro may have worsened the crisis, but it is certainly not the originator.


See the following graphic:

http://www.economiematin.fr/images/grap ... mprunt.png

The introduction of the euro has equalized interest rates between different countries.

This did not create the concept of debt, but greatly compounded the problem by allowing some countries to borrow much more than they should have. Then yes :

> the € uro is not the cause of the over-indebtedness, one can say that it amplified it.

I would add: strongly amplified. The cause is the incompetence of governments.

Christophe wrote:Also the dollar has functioned in the USA for "always" while there are strong economic disparities between the 51 states ... so?


The US is a country (not a heterogeneous meeting of countries), with a federal government and a single fiscal policy, and with the possibility for citizens to move easily between states to go to work where it works, so very different from the 'Europe. That's why with them, it works ...
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by Remundo » 04/01/13, 11:53

After a reminder of the sovereign debt crisis caused by bankruptcies due to subprime, Michel ROCARD returns on the law Pompidou Giscard, its ins and outs ...



Very interesting and synthetic : Idea:
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