Politics and public debt: how things really stand

These days we are witnessing what we could consider yet another drama on the issue of public debt.

Some countries, taking the question of the rule of law as a pretext, perhaps would like to invalidate what has already been decided on the resources of the Recovery Fund.

For his part, the current commissioner, and former Italian premier Paolo Gentiloni, makes a reference to the question of the need to continue, for the future, on a trajectory of descent of the debt, highlighting the exceptional nature of a policy of derogation from the European parameters .

Instead, the current minister for the economy, Gualtieri, highlights the need for consistent economic growth.

Where is the truth?

Politics and public debt: how things really stand

To answer this question, we mean it as a coherence between what has been declared and what has been achieved by various political exponents. Does this consistency really exist?

Furthermore, we ask ourselves what the real effectiveness of certain policies is.

So far it must be said that there have been only two executives, during which the Italian public debt has not increased. The Tambroni and Zoli governments, which lasted a total of 529 days.

But, apart from this parenthesis, now distant in time, dating back to the period between the late fifties and the early sixties, all other governments have experienced an increase in debt.

It is also interesting to note that above all those who express opinions on what should be done, as experts or politicians, known for their rigor, then the proof of the facts were those, under whose executives the debt increased the most.

In fact, here is a table of who is at the top of the ranking of executives with the greatest growth in public debt:

relationship between politics and public debt

We find Amato, known for his balance on current accounts.

But also Monti, a former European commissioner who became President of the Council precisely to try to put the accounts under control.

But also Gentiloni, who even in recent days, as commissioner, wanted to do so with a call to rigor.

First conclusions

If the numbers are not an opinion, one would think that the so-called recipes of this school of thought are probably wrong. And referable to what we can define rigorism.

Is it possible that everyone is wrong to apply them?

Probably not. Much more likely it is the recipes, as such, that are wrong.

What alternatives?

From the foregoing it therefore appears that rigor is not the best viaticum for the sustainability of the public debt.

On the other hand, the alternative of focusing on expansionary growth policies is not always so easy, especially in phases such as the current one.

In non-EU systems they have probably found a third way, as would appear from analyzes conducted on the comparison between the increase in the money supply and the debt.

Print the money you need, without correlating it with the issuance of new debt.

Under the old saying "it is done, but it is not said".

Who knows that, apart from Switzerland, Japan and the USA, where it seems that this new monetary policy has taken hold, it will not find application in the eurozone as well. Then when this comes to the conclusion of the failure of now obsolete and anti-cyclical policies.

Curated by Gian Piero Turletti, author of “Magic Box" is "PLT "

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