An interesting brouhaha has broken out in France, lately famous for reinvigorating the idea of wealth taxes: The French government should default on (“annul” “cancel” — the left is great at euphemisms) its debt held by the European Central Banks.
Sciences Po and ENA. There is much rot in French thinking.
Note, the proposal is not about defaulting on the French debt. It's about defaulting on French debt held by the ECB. France has tried to rule Europe since before 1648, and has not given up. Napoleon tried to conquer Europe because he needed the money.
I may be paranoid, but that doesn't mean they're not after me.
Of course, that would,in a heartbeat, also take down the entire French banking system, whose sovereign holdings would be in default immediately. Amazing that Blanchard did not mention that.
There is, however, a milder form of this: a eurozone breakup, where more fiscally responsible countries (an ever-shrinking set) would leave the euro and introduce their own (potentially common) currency, which would presumably be stronger.
That would permit the French, and whoever else wants to have a common currency with them, to run a looser fiscal policy underwritten by the now smaller ECB. And, it would in all likelihood be back-to-the-future: another currency crisis and reform in short order and another "new franc."
And do you maintain any communications with your colleague Mr Warsh? Or perhaps you know enough to know what he's probably thinking? I am staying tuned!
Isn't this a more relevant question for the Fed, since it is part of the US government? The Fed "buys" Treasury debt by writing up some bank's reserve balance. The Fed's balance sheet gets bigger and the Treasury's gets smaller, but total US obligations are unchanged. In fact the Treasury just announced something quite similar: It will "buy" long Treasury debt and pay for it by issuing more bills. Why couldn't Bessent take trillions off the Federal debt by cancelling the bonds held by the Fed and replacing them with some vague capital note that would not count as debt?
“If nobody cares, then this French Magic Money Tree really does work.”
Thank you for using this term whose acronym would also be MMT, as that is precisely what this sounds like, except perhaps slightly stupider and even more obviously wrong than what the Modern Monetary Theory-types advocate.
Pigasse should not be taken seriously. Look at his bio:
https://en.wikipedia.org/wiki/Matthieu_Pigasse
Sciences Po and ENA. There is much rot in French thinking.
Note, the proposal is not about defaulting on the French debt. It's about defaulting on French debt held by the ECB. France has tried to rule Europe since before 1648, and has not given up. Napoleon tried to conquer Europe because he needed the money.
I may be paranoid, but that doesn't mean they're not after me.
Of course, that would,in a heartbeat, also take down the entire French banking system, whose sovereign holdings would be in default immediately. Amazing that Blanchard did not mention that.
There is, however, a milder form of this: a eurozone breakup, where more fiscally responsible countries (an ever-shrinking set) would leave the euro and introduce their own (potentially common) currency, which would presumably be stronger.
That would permit the French, and whoever else wants to have a common currency with them, to run a looser fiscal policy underwritten by the now smaller ECB. And, it would in all likelihood be back-to-the-future: another currency crisis and reform in short order and another "new franc."
And do you maintain any communications with your colleague Mr Warsh? Or perhaps you know enough to know what he's probably thinking? I am staying tuned!
Mon dieu! Quel désastre.
Isn't this a more relevant question for the Fed, since it is part of the US government? The Fed "buys" Treasury debt by writing up some bank's reserve balance. The Fed's balance sheet gets bigger and the Treasury's gets smaller, but total US obligations are unchanged. In fact the Treasury just announced something quite similar: It will "buy" long Treasury debt and pay for it by issuing more bills. Why couldn't Bessent take trillions off the Federal debt by cancelling the bonds held by the Fed and replacing them with some vague capital note that would not count as debt?
“If nobody cares, then this French Magic Money Tree really does work.”
Thank you for using this term whose acronym would also be MMT, as that is precisely what this sounds like, except perhaps slightly stupider and even more obviously wrong than what the Modern Monetary Theory-types advocate.
FMMT