Some notions of inflation, money and finance… (3/3)
Keywords: money, cost, Friedman, Keynes, chicago boys, monetary, Central Bank, ECB interest rates
Again, a straw in the shape of a beam! Look at the beautiful curves that this gives us (taken from a BNP Paribas Resarch document): that of the deviation from the target of 4,5%, and that of the cumulative deviation since 98 (the deviation by against the target is called the money gap). These curves are at the bottom of this article.
But will you tell me, since since you read Friedman and adopted his beautiful theory, if at all times and in all places, inflation is due to too much money, then one of two things: either we have had a stronger growth than the 2% forecast, that is to say we had a terrible inflation killing annuitants beyond the 2% targeted ...
Lost, and lost again. On average around 2% growth, and “inflation” below 2%. So the 1000 billion euro question is: where did this money go?
Come on, let me help you: remember ... the way governments and central banks calculate inflation strangely excludes ... the price of real estate assets as well as that of financial assets. Weird? Did you say weird?
When you listen to financial circles, or read the works of certain experts, it seems that the answer is clear. Yes, it is true, the planet (because there is not only Europe, it was the same story in the United States, and in the whole world) would crumble under the excess of liquidity… that is- ie money! To the point of not knowing what to do with it! Globally, the monetary base (that is to say the currency issued by central banks) is increasing at a rate of… 20% per year! Clearly, and this will undoubtedly make a back somersault of surprise to any accustomed to the 20 hour newscast having well integrated the "It goes badly, we are almost bankrupt, there is not enough money, France lives in beyond its means ”. Money, there is, and even there is too much, to the point that he does not even know where to invest, the poor (although his playground is global now, through free movement capital).
Surprising, isn't it? To the point that certain specialists from the seraglio (bankers, such as Jean Peyrelevade, former president (and rectifier) of Crédit Lyonnais, or Patrick Artus, chief economist of CDC Ixis) themselves begin to be moved and to draw the alarm bell. Artus even speaks of "capitalism without a project", because the profits of large groups accumulate and are no longer invested ... except to buy back their own shares for considerable sums (in order to artificially maintain the profitability of the dividend for shareholder). Large groups no longer know what to do with their accumulated mountains of money! And as Artus specifies in his recent book "Capitalism is in the process of destroying itself", this situation is largely due to central banks, whose complicity, to use the term used by the author, is patent for having favored the easy money creation at the origin of stock market and real estate bubbles.
Because do not think that the ECB is going it alone in this strange paradox. For 10 years, its American counterpart, the Fed, has just helped to double the amount of dollars in circulation in the world (an average increase of… 8% per year as if by chance). As the mechanism is not about to stop, the Fed has found a radical way to stop tickling it on this somewhat paradoxical subject: NEW! from March 23, 2006, it no longer publishes the M3 money supply figures! A surprising decision, announced in a laconic manner and without any real justification ... except for the fact of no longer showing what is difficult: the incredible increase in the quantity of money created in recent years.
For information, undoubtedly a little embarrassed, the ECB announced in 2003 that the objective of controlling M3 would no longer be considered as one of the pillars of European monetary policy! The only thing that remains is the control of the rattle for the crowds: the famous and so-called “inflation” (in fact redacted from what still does: the price of financial and real estate assets as explained above). Don't be surprised if one of these days M3 also disappears from the ECB tables…
So here is what is very singular all the same and brings us back to the beginning of the story and to Friedman. To prevent the state from spinning the banknote, some succeeded from the end of the 60s, but especially during the following decades, in removing the famous plate from the hands of the representatives of the people to put it in safer hands… for them. And now, as soon as it is done, the billboard starts spinning again! Contradiction? Yes, at least, but I would say much more: scam!
Because who benefits from this fresh money whose ink (even virtual) is not yet dry? To those who benefit from the speculative bubbles thus generated: real estate and financial assets. And don't tell me that the first-time homebuyer or the employee who owns three unfortunate shares in his company is one of the winners. This is only a screen intended to justify the extent of the hold-up! Because of course, this new money, created let us recall the ex nihilo (starting from nothing thus) through the credits granted to certain, enters the economy by certain very precise doors. It is of course the role of lending organizations (banks for example) to sort it out, a bit like a security guard (a "physiognomist") at the entrance of a nightclub. And I am not sure that the unemployed person, the RMiste or a whole category of the population have the "correct dress required" to return. On the other hand, all the financial engineering, of a complexity that one can hardly imagine, developed in recent years for the benefit of a minority of investors, is based on inexpensive credit making it possible to speculate on the financial markets. global in a way that people find it hard to imagine. This population, suit and tie, is of course welcome to the banquet of easy credit.
This must be seen clearly as the latest avatar to date in the historical concentration of wealth, the extent of which is only increasing. Apparent miracle of modern finance: the more money you borrow, the richer you get! I find it hard to explain this to my old mother… Other times, other customs they say. And other monetary system, above all. (…)
- The money creation scam
- M3 slippage curve for EU zone compared to the target of 4,5%:
- Curve of the cumulative deviation of M3 from the target:
- The site of the author of these pages
- Listen to and download “Des Sous et des Hommes” radio programs in .mp3
- What is the consumer price index?
- The European Central Bank website