The monetary authorities press the monetary brake and the accelerator at the same time… and the financial sleight of hand continues. We are in the presence of the great historical falsification, both in its modalities and in its extent.
The Tunisian monetary authorities offer us a spectacle of illusionism in terms of rigor. They give the impression of reducing liquidity where the focus is, but in reality, they increase it elsewhere.
They act like illusionists, diverting your gaze to where there is nothing more to see, while secretly accelerating elsewhere. They slow down (to reduce inflationary pressures) on one side, and accelerate (to support economic activity) surreptitiously on the other!
It is important to understand that our central bankers have not discovered a way out of orthodox monetary policies. Rather, they have put together a simulacrum to make people believe it, but objectively and concretely, they remain, and will remain in the long term, stuck in an impasse in the outcome, and it is stagflation (more inflation and more unemployment)!
For a decade, they have been playing on a keyboard: when a financial sector seizes up, they press another key to compensate for the restrictive effect in a discreet way, which misleads observers and pushes them to draw false conclusions.
In reality, there has never been an effective monetary tightening, thus explaining the overall economic resilience of the economy and the vigor of the markets (financial, stock market, real estate.).
The tightening is an illusion, always compensated elsewhere, but note it carefully, always by getting closer to the center of a system formed by the couple “central bank – administrative structures”, via increasingly astronomical amounts.
The historic slight deceleration in bank lending stopped in the first quarter of 2023. This credit slowdown is generally associated with recessionary conditions amplified by the COVID pandemic.
In reality, the rapid expansion of financial sector borrowing recreated excess liquidity elsewhere, exacerbating speculation in the financial and real estate markets to the point of generating a double bubble. While bank lending had slowed, this was more than offset by the action of the powerful link between the informal providential sphere and the operators of the speculative sphere.
However, inflation is here for a long time.
Which leads us to ask ourselves two questions:
Have we really reached the end of a process of indebtedness – monetization of public debt?
Is it possible that the price rise will really decline?
All the research we have done suggests that rising prices (inflation) are “structural”: in other words, generated and underpinned by market deviance.
The parameters (an ineffective monetary policy and an uncontrollable informal financial sphere) that we have just mentioned are always reproducible with the results that we know.
As a result, there will be a struggle between price stability (reduction of monetary inflation) and the stability of the system (monetary creation to combat banking panic).
The Governor of the BCT is like an acrobat mounted on a balancing wire, the thread of the democratic transition. With one hand, he holds the basket of price stability and purchasing power. On the other, the basket of stability of the financial system.
However, the objective of economic policy is always the same: to ensure that the monetary and banking system operates, to avoid double-sided panic: purchasing power and unemployment.
At all costs, we must reassure on both counts.
We will come back to it…
