Christine Lagarde

I got an 11.8m euro email from Christine Lagarde: Everyone should be happy. My “€11.8M EUR” has been located by none other than “Her Excellency Christine Lagarde,” the “EU Treasury Director,” according to an email that was mistakenly misplaced in my garbage bin.

At least, that’s what I can deduce from the email’s subject line and sender. I’m not willing to open the email, even if it means making this episode of Fortune & Freedom even more absurd than it already is.

Let’s begin with some context…

Given how frequently I’ve brought out her criminal record, which she obtained while serving as French finance minister, I doubt Christine Lagarde would contact me much.

However, the crime of financial negligence did not cost her the position of International Monetary Fund (IMF) chief at the time. But, as if that wasn’t enough irony, consider what occurred afterwards.

“There comes a point in time when one needs to just stop, turn the page, and go on,” she remarked of the ruling that convicted her, which she did to become the next head of the European Central Bank (ECB).

Given what the ECB has done subsequently, I’m not surprised she was sought after for her credentials of being “convicted for financial incompetence without being jailed.”

But here’s the most intriguing element of it all. The scammers elected to give her a different work title entirely. As if she didn’t already have enough relevant ones when it comes to paying out €11 million to anyone she pleases.

The scammers chose an ominous title. She was dubbed the “EU Treasury Director.”

This position does not currently exist… yet.

In fact, the fake email could be a message from the eurozone’s inflationary future. That will be the time when the government of the United States of Europe distributes million-euro cheques to its citizens, similar to how the US government recently distributed thousands. In real life, for some reason, I keep receiving unexpected cheques nearly as large from the Japanese government…

So, perhaps this con artist is actually forewarning me about what’s to come for the eurozone. A European nation-state throws currency around like confetti, resulting in a period of massive inflation.

For the time being, the EU is a form of the confederacy. It lacks a treasury because it is not the federal government of a European Union. Instead, it has delegated authority with the promise of cooperation from national governments. In the end, however, it is those governments that disburse the funds.

However, if the EU becomes more of a nation state with its own treasury, the limits may vary. And, without a doubt, Christine Lagarde would be an ideal choice, having held almost every imaginable connected post save that of the EU President.

The revolving door between national governments, organisations such as the IMF, and central banks such as the ECB are also becoming increasingly ludicrous in Italy. Mario Draghi, the former ECB president and current Italian prime minister, may be able to occupy as many positions as Christine Lagarde, with the former ECB president and current Italian prime minister now eyeing Italy’s presidency. Former Federal Reserve Chair Janet Yellen now works for the Treasury in the United States. And so on – it’s an old storey, but it’s becoming increasingly obvious.

It also demonstrates how central banks and governments are increasingly intertwined in each other’s affairs. If you don’t pay attention to history, this may not matter much. But that’s another storey.

The timing was another intriguing point that the fraudster no sure anticipated in his email to me. When it comes to tightening monetary policy, the ECB lags behind its counterparts.

Fears that the US Federal Reserve may tighten too much, too quickly fueled the current stock market selloff. The Bank of England stunned the market by raising interest rates only marginally. Other central banks are also on the march.

But it’s business as usual at the ECB.

The German newspaper Bild recently ran the headline “Act, Mrs Lagarde.” The criticism goes on to say that the government has been unusually quiet about the inflation situation, despite the fact that citizens are suffering month after month. The study criticises Christine Lagarde for arguing that inflation is unimportant enough to debate, despite the fact that US officials do exactly that. “This must end” and “inflation disproportionately affects the poorest” are two crucial quotes.

Not long after the article was published, producer price inflation in Germany hit 24 per cent…

Christine Lagarde, on the other hand, is sticking to her guns, maintaining that inflation will moderate and that Europe is distinct from the United Kingdom and the United States. The euro is falling in foreign exchange markets as no tightening is insight.

The main issue, though, is that inflation inside the eurozone is separating. However, Lagarde is only allowed to create one monetary policy for all of them. As Tolkien would have said…

One monetary policy to rule them all, one exchange rate to restrain them, one central bank to bring them all together, and the euro to bind them.

This casts doubt on the post of EU Treasury Director. Do you think the eurozone could handle a single fiscal policy if it can’t handle a single exchange rate and monetary policy? Imagine trying to persuade the Germans and Greeks to agree on a welfare state…

Another risk is that the ECB may lose control of the bond markets. Interest rates are already rising in that country, even if the central bank isn’t driving the increase. Lenders to governments aren’t willing to lose money by the bucketload, or at least not as quickly as they have been recently, with negative interest rates on bonds and inflation at 5%.

It’s no surprise that central bankers are switching jobs to work on fiscal issues. That is the current policy crisis.

Nick Hubble
Editor, Fortune & Freedom

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