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Public debt: an \u201cexistential threat.\u201d<\/strong> That is how it is described by the guardians of budgetary orthodoxy, whose alarmism owes more to populism than to a rigorous understanding of the mechanisms at play. Their discourse aims to instill fear for ideological purposes. It serves a hidden agenda. Unless, perhaps, they simply ignore the intimate ties between taxation and monetary policy\u2014which is just as serious.<\/p>\n Public debt is the other side of private savings. Every euro of government debt corresponds to a euro of assets for households and businesses. Presenting debt as a threat amounts to denying this interdependence, and to turning an accounting fact into an instrument of political terror.<\/p>\n In the world of institutional reality\u2014within a sovereign monetary system\u2014public spending comes before taxation, and public debt is an instrument of monetary sovereignty. The State does not wait to collect taxes\u2014nor is it dependent on them\u2014to spend. No: it spends first, thereby creating the income that will later be taxed.<\/p>\n Taxation therefore does not \u201cfinance\u201d the State; it regulates demand, redistributes wealth, and gives value to the currency. Public spending injects money into the economy, while taxes withdraw it to avoid overheating. The real constraint is not financial but tangible: as long as there are unused resources\u2014unemployment, underutilized production capacity, infrastructure to build\u2014the State can and must spend to mobilize them.<\/p>\n Inflation is the only limit, not the budget balance. If and when it appears, it is fought by adjusting fiscal and monetary policies to contain price pressures, not by cutting useful expenditures. By issuing debt, the State is not tapping into some pre-existing pool of savings, but generating a safe asset that stabilizes the financial system. The central bank, for its part, always has the capacity to intervene in this market to guarantee its liquidity. The ECB demonstrated this by massively buying government securities after the 2008 crisis and during the pandemic. Far from leading to catastrophe or triggering a time bomb, these measures in fact preserved stability.<\/p>\n We must finally understand this fiscal-monetary nexus: there are not two separate spheres\u2014budgetary on one side and monetary on the other\u2014but a continuum, a circuit, in which public spending, private savings, and central bank action are interwoven. We must put an end to the simplistic analogy that ignores the fundamental nature of the State as a currency issuer.<\/p>\n The populists of fear, however, revel in a reductive vision of the economy that, in truth, forms the core of their electoral strategy. By frightening citizens with apocalyptic scenarios\u2014runaway inflation, a repeat of the Greek crisis, IMF bailouts\u2014they exploit irrational fears to impose sacrifices.<\/p>\n This populism of austerity serves an obvious political function: to transform a democratic question\u2014what do we want to dedicate our collective resources to?\u2014into a pseudo-accounting necessity. It depoliticizes the debate by reducing it to a single number\u2014debt level\u2014when the real issues are the distribution of wealth and the direction of public investment.<\/p>\n The intellectual fraud of treating a sovereign state\u2019s budget as if it were a household\u2019s is nothing but a strategy to shrink the State, leaving us a bitter society. Denying this truth condemns France to permanent austerity, chronic underinvestment, and the erosion of public services. It means refusing to see that we have the monetary means to ensure the ecological transition, strengthen hospitals, fund research and education.<\/p>\n Public spending injects money; taxation regulates it. Debt is an accounting entry, not a vice. An ambitious policy means debt is not a problem if it serves the common good: it is austerity that is the real threat.<\/p>\n","protected":false},"excerpt":{"rendered":" Public debt: an \u201cexistential threat.\u201d That is how it is described by the guardians of budgetary orthodoxy, whose alarmism owes more to populism than to a rigorous understanding of the mechanisms at play. Their discourse aims to instill fear for ideological purposes. It serves a hidden agenda. Unless, perhaps, they simply ignore the intimate ties…<\/p>\n","protected":false},"author":4,"featured_media":30289,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"give_campaign_id":0,"_crdt_document":"","_exactmetrics_skip_tracking":false,"_exactmetrics_sitenote_active":false,"_exactmetrics_sitenote_note":"","_exactmetrics_sitenote_category":0,"jetpack_post_was_ever_published":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"mc4wp_mailchimp_campaign":[],"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":true,"jetpack_social_options":{"image_generator_settings":{"template":"highway","default_image_id":0,"font":"","enabled":false},"version":2},"_wpas_customize_per_network":false},"categories":[648943034,648943032,648943031,648943035],"tags":[],"class_list":["post-30280","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-not-the-budget","category-public-debt-accounting-reality-vs-political-myth","category-the-fiscal-monetary-nexus","category-the-real-populism-austerity"],"yoast_head":"\nFiscal and monetary: intimately connected<\/h3>\n
The real populism: austerity as a horizon<\/h3>\n