Now that Professor Conte has to submit the name of the economy and finance minister to President Mattarella for approval, it is imperative that the debate on public finance, which is inevitably associated with the figure of the new economy minister, takes into account not only the new flows (budget deficits) that will fuel public debt, but also the issue of the existing stock of public debt and its management. It is therefore necessary that the most garrulous singers of the opportunity to finance new expenses or reduction of deficit revenues, unexpectedly associated with imaginative multiplier effects, take into account the more modest accounts kept by the DGT (the Directorate General of the Treasury): every deficit must be accounted for and financed with an issue of a corresponding amount of government bonds.
With more correct words, public opinion must be communicated that the budget deficit is financed with the savings of Italian and foreign savers who subscribe to government bonds: which are added to the pre-existing stock of public debt bonds. In the case of Italy it must always be made clear that the colossal mountain of its public debt is financed by households and businesses that have trusted the state to repay the debt and pay some interest. In other words, the state debt is wealth in the portfolio of savers who have trusted it.
But up to what point in the growth of the Italian debt stock will savers trust the Italian state? Could it be that the imaginative clerics praying for the new deficits and self-described Keynesians have underestimated or completely overlooked the risk of approaching the “Minsky moment”? Which takes its name from the analyzes of one of the most famous and appreciated Keynesian economists, albeit less read in our academies? Author of an essay published in the first half of the XNUMXs, with the prophetic title “Could it repeat itself? Instability, and finance after the crisis”.
In fact, he annotated the BIS report for 2008 under the evocative title "end of the (impossible) and race" that (page 8) the "Minsky moment" coincides with "the awareness and disengagement" on the part of the operators from the financial stability of the markets, which, in the Italian case, could precisely concern the "disengagement" from the renewal and subscription of public debt securities: in particular when, in a few months' time, the ECB will cease to stabilize the public securities market.
In fact, it is necessary to remember that, underlying the public debt-GDP ratio, many politicians soi disant economists overlook that about 33% of the Italian public debt is held outside national borders, much to the shame of the sovereigns. It should be added that the average life of government bonds, all denominated in Euros, is 6,9 years. On average, this means that around 350 billion euro must be renewed each year on expiry, otherwise the public debt will default. This requires the sovereign government to maintain and/or win the trust of the holders of the stock of public debt securities with words of stone that cannot be summed up in a twitter.
In fact, if the skilful and severe hand of President Mattarella watches over the laws lacking coverage, exercising the faculty of referring to the Chambers of laws that disrespect article 81 of our Constitutional Charter, in the case of the management of the public debt stock it is the ravings of the most garrulous and reckless politicians who, together with the anti-euro leanings and the exit from it, can bring us dangerously close to the "Minsky moment". In other words, the future minister of the economy must be well aware that the most difficult problem is to keep the words of the policy not only to stop deceiving national opinion, but also not to continue to disorient the financial markets who every day vote their trust in national governments, to the great disgrace of sovereignists.
