Bitcoins and quantitative eating that meets

France has no money: Stunning debt

The Prime Minister leads a number of discussions with political parties this week to avoid the collapse of his government. The aim is to find a common basis for returning to the budget deficit less than 3 % of GDP by 2029.

In a shorter period, the budget deficit of 6.1 % of GDP must return from 2024 to 5 %. The budget efforts to be provided is 60 billion euros, of which approximately 40 billion through a reduction in public spending.

In 200 years, France has accumulated a debt of EUR 3,345 billion of 114 % of GDP. It increases around 160 billion a year. Of this total total number, Emmanuel Macron has accumulated 1,115 billion in 2017.

As a result, interest is now more than 60 billion euros per year. This year they could become the first budget of the nation if the rates do not decrease.

The problem, opposition parties are not satisfied with the strategy of austerity measures and intend to overthrow the government during the vote on 8 September.

President ECB warned of the “worrying” risk of the collapse of the government. This is because it will most likely lead to an increase in loans rates.

The 10 -year rate of France is currently around 3.50 %, the highest since 2011. It is just like Greece. And even though the ECB has reduced its rates. Its main rate increased from 4.50 % in September 2023 to 2.15 % today.

Christine Lagarde said she was monitoring the cost of loans in France “very carefully”. But what could do in the case of the French government censorship on September 8?

Quantitative eating in sight?

It recalls, ECB holds approximately 25 % of European public debt. It is 23 %in the United States. Yes, the ECB bought a quarter of European public debt through its assets programs.

This means that governments no longer pay interest on 25 % of their debt. The reason is that the interests perceived by the ECB are redistributed to national central banks, which in turn redistribute them to state.

In other words, the United States government will not pay $ 1,000 billion, as is often understood, but 750 billion. The same in France. It is not 67 billion, but rather 50 billion.

This reminder that has been made is the question whether the ECB could revive quantitative release if French rates should fly? Yes.

Nothing prevents central banks from turning the ticket advice. The fact that Donald Trump is on the Fed attack suggests that it is exactly his ambition. The 10 -year -old rate is 4.22 %…

But there is no miracle. At the end of the end, the debt is always facilitated by greater inflation if GDP growth does not occur. Allowing states to increase money supply much faster than economic production will eventually lead to price increases.

Increasing productivity (production per person) is therefore difficult in a world that has exceeded its conventional oil peak (2007). Innovations like AI or Quantum Computer are full of promises. But while they are waiting for them to actually take place, observation is that growth has slowed down for decades for decades due to physical growth limits.

For example, oil production increases increased from 7 % per year (from 1900 to 1970) to less than 1 % today. While the front, the money supply is still rising to a much higher pace (~ 7 % per year).

Bitcoin and Pyromanic Firefighter

It is difficult for the government to reduce spending. It is better to print the money. As the legendary investor Ray Dalio wrote in June:

When countries have too much debts, a privileged manner of a political decision is generally to reduce interest rates and devalue the currency in which the debt is denominated. It is therefore wise to bet on this scenario.

Ray Dalio, founder of the billionaire of the giant Bridgewater Investment Fund.

And to reduce interest rates, it is necessary to print “quantitative eating”. This is a keyword that will have to be monitored in the coming months. Especially since May, when Donald Trump will replace the Fed President.

If you want to come to an object that we are interested in, other quantitative eating would be bull for bitcoins. Historically, all active ingredients draw during these monetary softening periods.

Bitcoin immediately appreciated a few days ago, after President Fed suggested the upcoming decline in rates, potentially 18 September.

In short, the debt builds France and Europe in the face of dilemma. Reducing public expenditure by EUR 40 billion, as expected, can cause social and political tensions, and even more if the François government drops.

Relauching quantitative easy would contain loans costs, but it would be a weakness. In addition, my ticket benefits from those who are rich enough to hold prestigious real estate, works of art, good stock markets, etc.

Therefore, Bitcoin will certainly be a big winner if the central banks had to act again with Pyromanian firefighters. It is the most precious asset in the world while it is accessible to everyone, regardless of its savings.

Don’t miss this article about the same subject: Bitcoin: Prediction of shock price.

Renunciation

The words and opinions expressed in this article are involved only by their author and should not be considered investment counseling. Do your own research before any investment decision.