The French debt crisis reminds us that gradualism never works, that statism always ends in ruin and that those countries that bet on more government and higher taxes always end in stagnation, risk of default and social unrest. France’s government debt-to-GDP exceeds 114%. However, unfunded committed pension liabilities reach 400% of GDP, according to Eurostat.

The fiscal deficit announced for this year is 5.4%, but market consensus maintains an expectation of 5.8%. The five-year credit default risk has risen by 20% in twelve months. The yield on French two-year debt exceeds that of Spain, Italy, and Greece, and its risk premium to Germany has reached 80 basis points—20 above that of Spain.

Most economic commentators ignore monetary aggregates and the negative effects on growth and investment of the constant increase in government spending. However, the reality is that we live in a world where the economic impact of new units of currency is diminishing and generating negative results in many cases.

In developed economies, anemic economic growth requires more monetary stimulus, and government spending absorbs most of the new credit, leading to weak productivity, poor growth and unproductive expenditure.

Central banks have become the dominating force in financial markets.

Easing and tightening decisions move all assets from bonds to private equity. Their role is supposed to be to control inflation, provide price stability, and ensure normal market functions. However, there is little evidence of any success in achieving their goals. The era of central bank dominance has been characterised by boom-and-bust cycles, financial crises, policy incentives to increase government spending and debt, and persistent inflation. Recently developed economies’ central banks have taken an increasingly interventionist role.

The creation and proliferation of central banks over the past century promised greater financial stability. Nevertheless, as history and current events continually show, central banks have not prevented financial crises. The frequency and severity of these crises have fluctuated but have not declined since central banks became the leading figure in financial market regulation and monetary interventions. Instead, central banking has introduced new fragilities and changed the nature, but not the recurrence, of financial turmoil.

The agreements the United States has signed with its main trading partners are both positive and realistic.

They demonstrate that, in 2024, the world was not a trade paradise of spontaneous cooperation among free-market companies as per David Ricardo’s ideal, but rather a statist system filled with barriers against US businesses and political efforts to pick winners and losers.

The controversy surrounding the agreement between the United States and the European Union can only be explained for three reasons: animosity toward any achievements of the Trump administration, ignorance about the only realistic alternative, or because critics of the deal were genuinely satisfied with the protectionism and European barriers in place in 2024.