Macron, backed by the German liberal empire, has taken over France to save the Euro by imposing austerity and changing French labour laws (whether he can do that remains to be seen). In 2013 we were reminded by Victoria Chick at a Positive Money conference that the Quantity Theory of Money as revived by Friedman’s ‘… monetarism’ was the basis of the construction of Euro,… and this determines the way the ECB is doomed to function’. ‘Can’t be very good then can it?…’, added Chick as an aside.
But it’s the way bankers ‘see’ money – as a ‘quantity’, or ‘commodity’, or ‘balance’ if you like, which requires debt deflation (austerity) to increase the value of money assets, wilfully forgetting that it is – in double entry bookkeeping terms – at the same time a debt, and that it is in the interest of debtors to inflate. Brexiting Britain is in fact going in that direction by intentionally devaluing sterling. But, going back to basics, money is almost always in origin a debt (or loan) which the debtor (or borrower) recycles through the banking system via the ‘deposits’ of other recipients and suppliers, to provide the wealth of the financial system.
Hyperinflation is bad, like anything extreme is bad. Even Keynes (in 1919 in The Economic Consequences of the Peace) told us that monetary depreciation is a sure ‘means of overturning the existing basis of society’. Monetary depreciation happens if inflation gets out of control. But central banks continually push out the shibboleth that inflation is an unambiguous cost, borne equally by all members of society, and they see their role as minimising (rather than optimising) this cost. However, it is clear that on balance moderate inflation is good and creates wealth, where deflation and austerity merely maintains wealth that has already been created.
That’s the problem that France and the Southern belt of European countries face as financial neo-colonies of Germany.