Currency confidence
When analysing the principal aspects of economic sciences, we arrive at a very simple and clean conclusion: the sole important thing of assuring a strong economic circuit is currency confidence.
After having abandoned the golden standard, the currency is debased, this implies that its golden counterpart is no longer fixed and that it exist only but for itself.
A currency is also fiduciary, visually based on confidence.
But what does this confidence imply? This confidence concerns the time horizon during which currency power is predictable.
In other words, when a currency evokes confidence, it can be looked into at a long term without the fear of its purchasing power to disappear.
On the contrary, a currency that evokes suspicion, will immediately be exchanged for real goods and will not under any circumstance be accumulated. A currency that burns its own fingers is consumed quickly…
Currency confidence is thus based on the value of time usage
Consequently, a solid economy cannot function without a stable currency.
But, at the same time, the currency is a State invention for it is the State that prints the money and holds the guardianship. The currency thus holds a state-social function that reflects the royalty to strike money.
For this reason, excessive sovereign debt is incompatible with a stable and strong currency, for a currency is guaranteed by sovereign debts and states naturally tend to reimburse their debts by monetary corruption , viz. a depreciation of currency value.
It is even more true that nowadays, monetary creation serves to buy sovereign obligations in the context of the quantitative relaxations of the European Central Bank. The latter inevitably lead to the weakening down of the currency and embrace long-term inflation.
This explains the strict German position, based on the industrial discipline of a strong currency that is not altered by inflation.
We intuitively feel that it will be impossible to withdraw ourselves from the sovereign crisis without successive monetary relaxations, which will lead to an inflation that we qualify as « resigned ».
Moreover, this sovereign crisis reveals the incompatibility of public debt and monetary harmonisation.
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