François Bayrou has made pedagogy his new mantra. During the summer and since the beginning of the school year, the prime minister, who faces a decisive vote of trust on Monday, tried to alert several times about the “severity” of the country’s debt level and convince the French to accept the efforts requested as part of their budget project.
Undoubtedly, the largest world is understood that François Bayrou has multiplied in its YouTube channel and television comparisons between the state’s budget and that of a Lambda family: “We are threatened by an evil that we will not escape if we are not evil.
“When you are forced to borrow, not buy a house, an apartment, for domestic equipment or buy a car, but simply to pay everyday costs and that you can no longer reimburse without going to the bank every month to request an additional loan that is paid more and more expensive, it is called ove. Loans to pay your current expenses.
The State has an infinite life expectancy
“We took to the back of the youngest. It would never do that,” said Prime Minister a few days ago. If it seems clear enough at first glance, is this really relevant parallel?
Beyond the orders of magnitude that are obviously not the same, the main difference is that “a state does not have the same horizon of life as a home,” recalls Olivier Redoulès, economist and director of studies in Rexecode.
The State is in fact immortal, unlike home: “It is for this reason that people who have reached a certain age have more difficulty obtaining a loan, because the probability of dying is greater,” Sylvain Bersinger specifies.
Heirs can certainly take care of the debts of a deceased, but also have the possibility of rejecting the inheritance, in which case they do not have to reimburse debts to the creditors. On the contrary, infinite life allows you to continually borrow (within a certain limit anyway) and “roll your debt.” In other words, to reimburse the loans that arrive due to … new loans.
Prosecutors and the action of central banks
Also keep in mind that the State cannot go bankrupt in the legal sense of the term. Of course, he has all the interests to pay his debt and pay interest to his creditors, since he has all the interests in not borrowing to maintain the confidence of the lenders. Otherwise, it could be found in breach and being forced to apply particularly painful recovery measures. But as a sovereign state, a court cannot put it into liquidation to impose it to resell its property to reimburse its creditors.
The other advantage of a state compared to a home is that “it can increase taxes” and, therefore, increase its income, emphasizes Olivier Redoulès. When the employee cannot increase his salary in an instant. The fact is that this option is not exempt from danger, since it raises the question of acceptability by the population and can penalize growth.
If an increase in taxes is not enough, it is still the weapon of the Central Bank that has the power to “rotate tickets”, that is to create money to fly to the aid of a state. The situation is a bit different between countries like the United States or the United Kingdom and France that, part of the euro zone, “fell into a motto that does not matrosa,” recalls Olivier Redoulès. This does not prevent the interventions of the European Central Bank that, in recent years, has greatly bought public debt titles against the newly created currency.
Source: BFM TV
