Occasional X: How it works (DXXV)

“Those large deficits in the 2010s set the stage for today's looming fiscal crisis. The high debt/gdp ratio today is the footprint of all those large deficits, in spite of the French government's low funding costs at the zero lower bound in the 2010s. Those large deficits certainly did not spur enough growth for France to simply grow out of the high debt/gdp ratio, contrary to what was advertised.” (Hanno Lustig) France is a good example of the self-destructive working of Capitalism. In free-market economies, public debt has increased with minor interruptions for 200+ years. Growing debt has always been a crucial ingredient in Capitalism's life elixir. The representative economist doesn't get it. Put simply, he gets the foundational concepts of profit, distributed profit, income, saving, deficit, and debt wrong. That's why economics has been failed/fake science for 200+ years. The monetary economy in general, and the French economy, in particular, thrives on growing private/public debt. If this growth stops, the economy implodes. Macroeconomic profit Qm is given by the axiomatically correct Profit Law Qm:=(I−Sm)+(G−T)+(X−M)+Yd. The Law implies Qm:=(G−T)>0, i.e., macroeconomic profit is (co-)produced by deficit-spending/money-creation, i.e., the growth of public debt. The minimum requirement for a free-market economy is that macroeconomic profit is greater than zero, i.e., Qm≥0. If Qm<0, recession/depression/breakdown results. The free-market economy is continuously saved from breakdown by the deficit-spending/money-creating duo Treasury/Central Bank, i.e., the State. This means that the premise of mainstream economics, i.e., that the unfettered free-market economy is a self-adjusting, self-stabilizing, and self-optimizing system, is axiomatically false. Ultimately, this means that the representative economist is too stupid for science. Hanno Lustig is living proof. Currently, both France and the USA are exploding the public debt. This increases macroeconomic profit Qm, according to the Profit Law. The point is that this is only the beginning. Profit will continue to increase exponentially and with it the number of billionaires/ trillionaires. It does not matter how bad the real economy performs. The growing public debt ultimately benefits WeTheOligarchy and not WeThePeople. Since the household sector is taxed for interest on government bonds, there is an absolute upper limit for the growth of public debt, which is roughly given by public_debt * avg_interest_rate ≦wage_income. Economic problems, though, start much earlier because of other irreducible items in the budget (military, health, etc.) and a not exactly known upper tax-to-income limit. The limit moves further away into the future if the interest rate approaches zero. If interest rates go up, the wall will be hit sooner. France is a clear example of how Capitalism works and that it will break down with systemic necessity.

— AXEC (@EgmontHandtke) October 11, 2026