To reimburse the colossal sums borrowed to keep afloat the economies struck by the crisis of the coronavirus, the States could be based on inflation, estimates the editorialist Nicolas Barré Wednesday.
To respond to the coronavirus crisis, all countries have mobilized considerable sums. But where are we going to find all this money?
The amounts are indeed gigantic, a bit as if we had Marshall plans in all countries. Laurence Boone, the chief economist of the OECD, the organization that brings together the developed countries, believes that in the euro zone alone, we have mobilized in these plans "well over 10%" of all our wealth. That is to say more than 1,200 billion euros, the equivalent of the annual wealth produced by Spain.
It's like a war effort. We need huge sums to avoid the collapse of our economies, to keep them alive. But where are we going to find this mountain of money? Well, we're going to borrow it.
But who will lend us such sums?
Good question. We are going to borrow it from investors in the financial markets, that is to say from savers who have money to invest. And then, as that will not be enough, the European Central Bank has announced that it will somehow absorb the surplus, which amounts to saying, even if it will never say it like that, that it will turn the printing press.
The good question is: what next? How do we repay? Let me give you a hint: we talked about war… Now, in World History, all wars, without exception, have been followed by inflation. Inflation which makes that one repays his debts with currency which is not worth much anymore. In short, it is quite possible that all this money that we will borrow to save the economy, we will never repay it completely…