PUBLIC DEBT. FROM THE BEGINNING OF THE YEAR WE HAVE BEEN FINANCED … ALMOST AT ZERO COST (i.e. at a cost much lower than the MES)
Bank of Italy publishes the situation of the Italian public debt, with particular attention to 2020. The data are very interesting and deserve a few words of comment, especially because they disprove a series of clichés that vary from Gualtieri's lack of liquidity to the fact that you have to join the MES because it “costs less”.
From January 2020 the state debt has gone from 2,444 billion as of January 31st to 2,530 billion as of June 30th. An increase of 86 billion due to emissions to cope with the various anti Covid-19 maneuvers, as well as the missed collections for the close-down and for the postponement of some tax deadlines.
Bank of Italy went from holding 408 billion of public debt in January to holding 485 billion. An increase of 78 billion. In the end, 90% of the major debt of the state went to the Bank of Italy. Recall that this incremental debt purchased by the Bank of Italy has a zero cost for the state, as the interest on the incremental debt is returned to the treasury in the form of a profit. With 90% of the incremental debt in the hands of the central bank, it is rather complex to say that the ESM would be cheaper, except that we could not get it at negative rates, which is quite unlikely.
In reality, following an elaboration of the data of Canale Sovranista, we are moving towards a situation of possession of the debt that we have already seen in the history of the Republic:
It is not impossible that we will reach the peaks of public debt holding of the seventies, when there were the oil crises which constituted a real challenge for the Italian economy which required direct intervention by the Bank of Italy to finance the deficit. Now the same is happening, but with the intermediation of the ECB. In the end, in order to survive, it was necessary to put aside all the artificial constructions linked to the European Union.
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The article PUBLIC DEBT. FROM THE BEGINNING OF THE YEAR WE HAVE FINANCED… ALMOST AT NO COST (ie at a cost much lower than the MES) comes from ScenariEconomici.it .
This is a machine translation of a post published on Scenari Economici at the URL https://scenarieconomici.it/debito-pubblico-da-inizio-anno-ci-siamo-finanziati-quasi-a-costo-zero-cioe-ad-un-costo-molto-inferiore-al-mes/ on Thu, 20 Aug 2020 08:16:31 +0000.