The different stages of flight from money: The worst is yet to come

Monetisation of public debt is going to lead to a huge increase (of around 70%) in the money supplied by central banks (the monetary base). Such vigorous money creation will lead economic agents to lose confidence in the quality and value of money, and will therefore lead to flight from money. What are its different stages? If only one country conducted a highly expansionary monetary policy, the residents of this country would sell its money (its currency) and buy other currencies; there would be a sharp depreciation of the exchange rate and high inflation in this country. But all OECD countries are conducting a highly expansionary monetary policy: there has therefore been no jump from one currency in to another; exchange rates have actually been very stable between OECD countries in the recent period; The first stage of flight from money is a flight from money as an investment vehicle : savers and investors try to get rid of money and buy other assets (equities, real estate, gold, etc.). This gives rise to asset price bubbles everywhere (this has already been the case since the subprime crisis and will get worse after the COVID crisis); This settles the question of money as an investment vehicle , but not the question of transaction money. The sentiment of money losing its value will lead economic agents to seek a different form of money than debased official currencies for their transactions ; this will certainly open the door for growth in private currencies (the various cryptocurrencies), provided that they are well managed, i.e. that the supply of these currencies does not increase excessively; Last, it is only if the loss of confidence in money le a d s economic agents to try to get rid of money by buying goods and services and not assets that there will be inflation in goods and services prices. For the time being, this is not the case. The extremely expansionary monetary policy being conducted in OECD countries will therefore first lead to across-the-board asset price bubbles; a second stage could see a break-up of the international monetary system due to the rejection of official currencies.