IGTA Journal - Autum 2020

France, Article: The Markets No Longer Listen to Mario Draghi ! By Jean-Paul Betbèze , member of the “Cercle des Economistes”, a French Think Tank, founded in 1992 and made up of 30 economists. From La Lettre du trésorier, No. 380, September 2020, magazine of AFTE, the French IGTA Member Association Mario Draghi speaks on 18 August in Rimini: "The debt created by the pandemic is unprecedented and will mainly have to be repaid by today's young people”. This implies that they must be put in a position to do so by training them better, to have more growth in this world that will become more competitive, and therefore more demanding. Otherwise, "it's bad debt". "Subsidies will stop one day and the lack of professional qualification will remain, which could reduce their freedom of choice and their future income”. Listening to him, one will have understood that this debt risks not being repaid if growth is not sufficient, due not only to a lack of physical capital, but above all a lack of human capital. A few months ago, the financial markets would have questioned the meaning of these words, wondering what they were hiding. They would have wondered what Mario Draghi himself would do if he were still at the head of the European Central Bank, just as Jay Powell at the Federal Reserve could probably ask himself the same question, following Janet Yellen and Ben Bernanke. After all, it was they who launched and increased quantitative easing, the central bank's purchase of public debt to prevent the financial pandemic that began in 2007 with the subprime crisis in the United States. They were the ones who escorted this unconventional monetary policy of forward guidance, from the announcement to one or two years ahead of the monetary policy they intended to follow. The aim was to remove any uncertainty about the idea that rates would be lower, longer, in other words that there would be more credit, cheaper. So, it was these big money-makers who made the debt rise, more "bad" than "good", before the covid-19. Did they have a choice? And yet, treasury bills yields are at their lowest, as if the risk had greatly diminished in the United States and Italy, not to mention that they are negative in Germany (continuously negative since May 2019) and France (very low since June 2019 and constantly negative since May 2020). And this at a time when budget deficits continue to rise, increasing the debt as never before with the pandemic. And these deficits support consumer demand and employment, through unemployment and business aid, but little investment and increased training. Bad debt, if nothing is done to support human capital? IGTA eJournal | Autumn 2020 | 11