Real money must reflect the realities of the real economy.
If it becomes detached from economic reality, like a clock that no longer tells the right time, it becomes a hazard to everyone.
Appointments are missed. Trains crash. You show up at the airport and find the plane left two hours ago!
Air France is on strike. Our flight — with Austrian Airlines — left an hour late as a result.
‘This is a mess,’ we said to nobody in particular, as we waited for a plane this morning.
‘Welcome to France,’ said a voice behind us.
Murdered by Barbarians
Puzzling out the secrets of money and interest rates was interrupted by the news…and nostalgia.
The gruesome details: An 86-year-old French priest was forced to kneel in his church. Then his throat was cut.
‘Murdered by Barbarians,’ screamed a headline in the French newspaper Le Figaro.
‘We must be pitiless,’ said former president Nicolas Sarkozy. ‘It’s war.’
He may have picked up a few lines from Saint Bernard, rehearsed nearly 1,000 years ago.
In the Burgundian town of Vézelay, on 31 March, 1146, St Bernard of Clairvaux delivered his famous oration on responding to the Muslim threat:
‘Will you allow the infidels to contemplate in peace the ravages they have committed on Christian people? […] Fly then to arms; let a holy rage animate you in the fight, and let the Christian world resound with these words of the prophet: “Cursed be he who does not stain his sword with blood!”’
In France — as in the US — saintly politicians compete to see who can most convincingly promise to ‘get tough’.
Of course, getting tough is just what the so-called Islamic State (known in France by its Arabic acronym, Daesh) wants.
The strategy is ancient. More than 2,000 years ago, radical Jewish groups conducted a war of terror against their Roman masters, hoping to provoke a crackdown by the authorities…leading to the radicalisation of the masses.
Did it work?
Depends on how you look at it. The Jews got their crackdown. Vespasian and Titus put down their insurrection, levelled Jerusalem, destroyed The Temple and, according to Josephus, killed 1.1 million Jews.
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Communists, Trotskyites, Maoists
We remember discussing the radicals’ strategy back in 1969.
This is where the nostalgia comes in…
Last night, we stayed at a tiny hotel in Paris, near where we first got to know the city 43 years ago.
We had gone for a semester abroad, after discovering that the tuition at the University of Paris was only $80. That meant that even with airfare, it was cheaper to go to the Sorbonne than to the University of Maryland.
The semester turned into a lifelong relationship, marked by equal periods of affection and disgust.
We didn’t speak French at the time, but we had had four years of it in high school. That seemed like plenty. (Although it later proved comically insufficient.)
But we were adventurous back then. And penniless. So, we got ourselves to Paris…and hung out at the bars around St-Germain-des-Prés.
It was a very different city in the 1960s. It was a world leader in fashion, technology, movies, food, and philosophy.
But Paris had a problem back then, too.
Communists, Trotskyites, Maoists, anarchists, syndicalists, and students — in 1968, they rebelled, ripped up the streets to build barricades out of the paving stones (the streets were covered with asphalt soon after), and engaged with the police in pitched battles.
By the time we arrived a year later, skirmishes between gendarmes and radical groups were still going on.
The organised rebels would race around a corner, throwing rocks and Molotov cocktails at police who formed up into protected phalanxes with their clear plastic shields.
Then the cops would suddenly charge the insurgents, swinging their billy clubs at anyone they could reach.
Trained and practiced, the terrorists would retreat quickly. This left the police with nobody to rough up except innocent onlookers.
That is how your editor nearly got hospitalised. Walking down the street, he was mistaken for a radical…knocked to the ground and worked over by three policemen, who eagerly went about their work with happy cudgels.
Sitting in a café with a bandaged face, we discussed the revolutionaries’ strategy with a young French intellectual of Trotskyite tendencies.
Even almost a half-century later, we recalled the conversation when we passed the café (still in business) where it took place.
‘Oh…sorry to see you got beaten up,’ he said. ‘But it’s just collateral damage. We’re making headway. The police don’t like it when we attack them. It’s a point of pride, more than anything else. So, they overreact. But the more they show on TV people like you getting beaten up by the cops, the more the working class comes over to our side. We’re going to win.’
The revolutionaries did not win. They did not topple the Fifth Republic. But they eventually got much of what they wanted — free schooling…free drugs and medical attention…a high-cost, zombified, crony economy…a bureaucratised, tightly regulated society…even a 35-hour workweek.
And now look at it.
‘Yes, it’s a mess…’ repeated the voice behind us.
For Markets and Money, Australia
From the Archives…
Why the RBA Would Be Foolish to Cut Interest Rates Next Week
By Greg Canavan | 28 July, 2016