And I fit in?

Our main problem and the reason I mention all this is simple: how the French state (and others) will he repay his debt?
This is an important question to which no real answer yet.

Traditionally, inflation is a way to repay the debt quickly at the expense of creditors. This premise is based on the idea that the state control inflation and it is still possible to create inflation in our situation. These two reasons are debatable. The state is within the European Union and does not decide one of its monetary policy and European countries have different interests. That inflation exists, it is necessary that wages increase so that people can continue to afford the goods and services whose prices increase except that globalization is here: wages rose only very limited way. The debt held by financial statements and therefore will not necessarily inclined to be reimbursed in funny money.


Irving Fischer was hypothesized in 1933 that debt and debt led to deflation because when the economy suffers, banks stop lending and lower consumer brings lower prices.

The war was also a “means” to melt down the debt but I hope that the popularity of this method is not what it was.
Second, deflation appears attractive. It is certain that some asset classes will fall regardless of the overall level of prices such as real estate .

It allows people not to suffer too much on a daily basis except for those who lose their jobs. This is the “least worst” solution for people but its drawback, if one believes the example of Japan is that it does not directly pay the debt but it allows those who have money to buy back assets …

Another solution would be that the state renegotiate its debt, ie it removes a party and in return, provides guarantees for other debts during this troubled period.

Partial cancellation of debt appears to many people, inescapable debt in its entirety is not refundable.
For you and me, the high inflation would mean that we should buy an asset that follows inflation to protect his savings (land, precious objects …). Real estate in this scenario could then become a safe haven. In case of hyperinflation, it would lose all interest during these periods because food tends to monopolize all the income and therefore leaves no room for paying rents which inevitably declining assets.

If the deflation scenario happens, remain cash. Do not keep assets that depreciate and be prepared to invest. Deflation does not create a sacrosanct growth but we can not have everything!

Related posts:

1. Inflation, deflation and economic considerations – part 3
2. Inflation, deflation and economic considerations – part 2
3. Inflation, deflation and economic considerations – part 1
4. The danger of deflation
5. The changing role of emerging markets: from deflation to inflation
6. Rise in inflation
7. The only assets that really are covered against inflation-linked bonds it
8. China: new fight against inflation
9. How to make investment in risky assets is consistent with inflation rising?
10. Inflation does not threaten the dividend shares