I ve decided to translate this article to English (via traductor) as i believed it is worth to read.
-- Monetary Leviathan: From Magic Money to Totalitarian Nightmare --
Why the modern revival of the liberal project requires incorporating a radical critique of the current monetary system, and the ability to propose a modern alternative like Bitcoin.
Here is the English translation of the quote by Alexis de Tocqueville from "The Old Regime and the Revolution" (1856):
"I dare to assert that from the day when the nation [...] allowed kings to establish a general tax without its consent, and when the nobility had the cowardice to let the third estate be taxed provided that it itself was exempted; from that day was sown the seed of almost all the vices and almost all the abuses that afflicted the old regime for the rest of its life and finally caused its violent death.
What differentiates tyranny and despotism from the freedom of modern democracy?
The consent to taxation, answers Tocqueville.
For it is through consent to taxation that citizens both legitimize the state's action and restrict its interference in their individual liberties. This second point is particularly important: a state without constraints, without limits, a "total" state, is called a totalitarian state.
While during the Ancien Régime, consent to taxation was not unknown, but often trampled by coercion and the sovereign's claim to absolute power, that is, exempt from control, modernity has brought its share of subtleties of a new order.
In 2024, the French state spent 50% more than it raised through various taxes (€162.4 billion1 deficit on €311.9 billion of expected net revenues).
In other words, more than a third of state expenditure is not financed by taxes, but by debt. When the state spends more than the mandate given to it to levy through taxation, its action loses legitimacy: the French have not consented to finance one euro out of three of public expenditure through their taxes.
Let's put it another way: the French have never given their agreement to a quantity of public expenditure that corresponds to the sum of the budgets of:
the Interior (32.9 billion €),
Higher Education and Research (27.2 billion €),
Housing and Urban Renovation (23.2 billion €),
Labor and Employment (21.5 billion €),
Ecological Transition, Energy, Climate and Risk Prevention (14.4 billion €),
Justice (11.9 billion €),
Culture (8.7 billion €),
Agriculture, Food Sovereignty and Forestry (6.9 billion €),
Europe and Foreign Affairs (6.5 billion €),
Overseas Territories (2.8 billion €),
Prime Minister's services (2.2 billion €),
Health and Access to Care (1.7 billion €),
Sports, Youth and Associative Life (1.6 billion €),
and Public Service, Simplification and Transformation of Public Action (0.4 billion €).
All these expenditures, or at least their equivalent in euros, have not been subject to an explicit democratic agreement with citizens. When reading this list of ministries and other expenditure items, one gets the impression that almost all state action is carried out arbitrarily, without consent...
And the future doesn't look much brighter: with the impossibility of forming a stable government, and therefore of voting on a finance law, the French have been spending since the beginning of 2025 without having voted on a specific budget.
How? Through recourse to debt that curiously always seems to find takers.
By the grace of Magic Money, that is, the use of accommodative monetary policies such as artificially low interest rates or the repurchase of public debt securities by Central Banks, the State frees itself from the financing mechanism that is taxation to massively resort to debt, and thus indirectly circumvents popular consent, casting the shadow of a return of the Leviathan.
Present in the Old Testament, this mythical monster, with unequaled power to which everyone must submit, served as an allegorical figure for Thomas Hobbes to name his major work, Leviathan. In this work, Hobbes breaks with a millennial theological tradition by proposing a "secular" justification for the necessity of the absolute power of the State, in order to prevent chaos between humans who are violent by nature.
Absolute power, without limits therefore, allowing arbitrariness and tolerating no form of deviation, like the mythical Leviathan. "Nothing that the representative of the Sovereign can do to a subject can be considered as an injustice or a harm [...], it can therefore happen, as is often the case in a State, that a subject is put to death on the order of the Sovereign without there being any wrong on either side" can be read for example in the book.
While the current political situation seems far from such considerations, the state's emancipation from its budgetary constraints through monetary flight is nevertheless an important lever allowing the expression of arbitrary or even totalitarian drifts in contemporary democracies. This process of circumventing fundamental democratic rules will continue as long as the drug of Magic Money has right of citizenship.
The modern revival of the liberal project therefore requires incorporating a radical critique of the current monetary system. Without it, liberals are condemned to criticize consequences of which they ignore one of the fundamental causes.
To understand this, we must therefore return to two parallel historical processes. First, on the evolution of the role and legitimacy of the State, to understand the tension that exists between the liberal vision and the socialist vision on this subject. Then, on the monetary changes that have marked the life of modern States, up to the fatal slide towards magic money that is fiat currency.
I. The Evolution of the Role and Legitimacy of the State
From Divine Right to Leviathan
The role of the state and the foundation of its legitimacy have greatly evolved throughout history.
Emerging from antiquity, in a Europe where feudalism was taking hold, the sovereign's power was fragile and his role circumscribed, often depending on vassals with shifting loyalties. He often contented himself with being the guarantor of stability and justice, without seeking to intervene in private or economic spheres.
Moreover, without an advanced system of bureaucracy or communication, a significant part of social and economic functions were assumed by various local structures: guilds, churches, lords, etc.
As for the sovereign's legitimacy, it was largely based on the divine character that Christian scriptures recognized in legitimately established power and was concretely established by the right of appeal, which made the King appear as the Sovereign Judge.
At the end of the Middle Ages, particularly from the 17th century onwards, significant political and religious troubles led to questioning the role and historical legitimacy of the sovereign. In France, the assassination of Henry IV in 1610, who had promulgated the Edict of Nantes and ended religious tensions, sent a poor signal. Eight years later, in 1618, a major religious conflict began, which would be known as the Thirty Years' War (1618-1648), during which all of Europe would be plunged into chaos.
With the advent of the Protestant Reformation, the divine legitimacy of the sovereign, without being fundamentally challenged, was naturally weakened by the profound movements that the Reformation had set in motion, particularly in regions where temporal power was shifting towards a new confession, especially in Northern Europe. Across the Channel, the first English Revolution saw the execution of sovereign Charles I and the establishment of a dictatorship under Oliver Cromwell, whose legacy was bloody.
It is in this particular context of religious conflicts, civil wars, and instability that Thomas Hobbes was born in 1588. These events profoundly influenced his thinking, leading him to seek the foundations of a stable social order and to propose a secular justification for the absolute power of the state. In his major work, Leviathan (1651), Hobbes describes the state of nature as a pre-social condition where human life is "solitary, poor, nasty, brutish, and short". According to him, without a sovereign authority to impose order, individuals would be in constant war with each other, if only to survive by seizing limited resources.
To escape this chaotic state of nature, Hobbes proposes the concept of a social contract, whereby individuals agree to surrender part of their freedom to an absolute sovereign. This sovereign, whether a monarch or an assembly, holds undivided and unlimited power, guaranteeing peace and security.
By providing a secular legitimation for the existence of a state, Hobbes marks a decisive turning point in Western political thought and philosophy. However, his work receives a mixed reception. While some oppose it for obvious religious reasons, others fear the absolute nature of the sovereign's authority proposed by Hobbes.
The Liberal Revolution of the State's Role
A century later, Montesquieu provides an answer to the Hobbesian Leviathan by proposing an antidote: the separation of powers.
His major work, The Spirit of the Laws (1748), defends the idea that no individual or group should concentrate all the levers of command of a state: "So that power cannot be abused, it is necessary that, by the arrangement of things, power should check power."
Through this phrase, Montesquieu lays the foundation for an institutional architecture that preserves liberties by fragmenting sovereignty between the legislative, executive, and judicial branches8. This revolutionary idea would inspire the American and French constitutions that were implemented following the revolutions in each of these countries.
In France, the Declaration of the Rights of Man and of the Citizen (DDHC), through its Article 2, allows for the establishment of an emerging notion: natural rights.
These are rights attributed to every human, not because they live in society, but by their mere humanity: liberty, property, security, and resistance to oppression.
These natural rights are still in force in France under the Constitution of the Fifth Republic. They are individual, universal, and unalterable liberties, described as "imprescriptible" by the DDHC.
Following the episode of the revolutionary and Napoleonic wars, this new state of affairs inspired 19th-century liberals such as Benjamin Constant, John Stuart Mill, and Alexis de Tocqueville, who deepened the idea of a state whose role was evolving: it was no longer an absolute sovereign, or simply a structure dispensing justice, but became the guarantor of individual liberties.
Benjamin Constant, for example, emphasized the importance of distinguishing between the "liberty of the ancients" and the "liberty of the moderns".
Drawing inspiration from ancient democracies, he described: "The aim of the ancients was the sharing of social power among all citizens of the same homeland. This is what they called liberty [...] As a citizen, he decides on peace and war; as an individual, he is circumscribed, observed, repressed in all his movements." Conversely, "the aim of the moderns is security in private enjoyments; and they call liberty the guarantees accorded by institutions to these enjoyments. [...] Individual independence is the primary need of the moderns."
The first liberty, according to Constant, is thus rather a collective liberty: the Athenian citizen is free primarily because all of Athens is free in the face of Sparta or the Achaemenid empire, and secondly because he directly participates in collective decision-making through direct democracy. The second liberty, that of the moderns, is an individual liberty: the French citizen is free because he evolves in a society that guarantees his natural rights and allows him to determine his personal aspirations alone, without state interference in his private sphere.
But Constant warns us against the dangers of each of these liberties: "The danger of ancient liberty was that men, attentive only to securing the sharing of social power, might make too good a bargain of individual rights and enjoyments. [...] The danger of modern liberty is that, absorbed in the enjoyment of our private independence, and in the pursuit of our particular interests, we should surrender too easily our right to share in political power."
Thus, while the ancients risked seeing the collectivity encroach on their liberties as individuals, the moderns risk being dispossessed of political power, convinced that by having distanced the state from their lives, they no longer need to be involved to ensure that the state assumes its role as guarantor of individual liberties, and is not tempted to interfere in private affairs.
For the temptation of the sovereign to become a tyrant again will be strong, and Constant warns: "The depositaries of authority never fail to exhort us to this. They are so disposed to spare us all sorts of trouble, except that of obeying and paying! They will say to us: What, in the end, is the aim of your efforts, the motive of your labors, the object of all your hopes? Is it not happiness? Well, leave this happiness to us, and we will give it to you." For the French philosopher, it is crucial not to give in to this facility: "No, Gentlemen, we must not leave it to them. However touching such a tender interest may be, let us ask the authority to remain within its limits; let it confine itself to being just. We will take charge of being happy."
Alexis de Tocqueville, a contemporary of Constant, took advantage of a trip to the young American democracy to observe the strengths and weaknesses of this nascent political system. In his two-volume work Democracy in America (1835-1840), he noted that popular sovereignty, if unlimited, can lead to a "tyranny of the majority," where minority rights are neglected, and where social conformity stifles individuality and freedom of thought.
Thus, he establishes an important distinction: liberal democracy is not simply the force of the majority. It is also and above all the institutional framework guaranteeing fundamental freedoms, even against majority opinion. Echoing Constant, he also warns against a "soft despotism," a subtle form of despotism where the state, under the guise of benevolence, infantilizes citizens by taking charge of all aspects of their lives, thus reducing their autonomy and civic responsibility.
The English philosopher John Stuart Mill, in his work On Liberty (1859), elaborates on Tocqueville's point about the "tyranny of the majority," and thus defends freedom of expression as a pillar of free society. He writes: "Let us suppose, therefore, that the government is entirely at one with the people, and never thinks of exerting any power of coercion unless in agreement with what it conceives to be their voice. But I deny the right of the people to exercise such coercion, either by themselves or by their government. The power itself is illegitimate. The best government has no more title to it than the worst. It is as noxious, or more noxious, when exerted in accordance with public opinion, than when in opposition to it. If all mankind minus one, were of one opinion, and only one person were of the contrary opinion, mankind would be no more justified in silencing that one person, than he, if he had the power, would be justified in silencing mankind."
Thus, even in a hypothetical situation where the entire population supports the government except for one person, this would not give legitimacy to this government to restrict the opinion or expression of the individual, however isolated he may be.
He adds that the damage, if there were to be coercion, would be suffered by all of humanity, and not by the citizen alone: "If the opinion is right, they are deprived of the opportunity of exchanging error for truth: if wrong, they lose, what is almost as great a benefit, the clearer perception and livelier impression of truth, produced by its collision with error."
Stuart Mill thus argues that diversity of opinion is essential to intellectual and moral progress, and that even minority or unpopular opinions deserve to be heard to avoid conformity and social immobility.
It should be noted that the reflections and dilemmas posed by these different authors still find particular resonance today: record abstention rates, the fight against disinformation or conspiracy theories, social networks, etc.
The common thread between Montesquieu, Constant, Tocqueville, and Stuart Mill is clear: limiting the power of the state to protect fundamental freedoms. But this project, as ambitious and humanistic as it may be, quickly comes up against the emergence of a competing ideology.
The State as a Tool for the Common Good
The 19th century saw the birth of a new socialist vision of the state's role. It was no longer simply a guarantor of liberties, but an engine of social progress.
Towards the end of the century, Karl Marx and Friedrich Engels, observing the rise of a proletariat living in miserable conditions, denounced the liberal promise as a bourgeois one, inaccessible to the masses whose material condition physically prevented them from enjoying the promised freedom. Other socialist currents before them directly attacked natural rights, particularly that of property. Pierre-Joseph Proudhon, a figure of libertarian socialism, wrote in his work "What is Property?" (1840): "What is property? [...] It is theft."
Under their influence, the state gradually moved away from its role as protector of fundamental freedoms and became the vector of wealth redistribution and social justice, to correct inequalities. This mutation is based on a simple but radical idea: the common good takes precedence over individual liberties.
Friedrich Hayek describes this evolution in his work "The Road to Serfdom," published in 1947.
According to Hayek, this major change in the state's role is particularly problematic and dangerous: once the state is no longer solely the guarantor of fundamental freedoms but becomes the tool of the common good and the engine of social progress, a relentless mechanism is set in motion.
For while it is easy to agree on the need to advance the common good, troubles begin when it comes to collectively defining what the common good is. The diversity of moral and ethical viewpoints on the question results in one group imposing its own vision of the common good at the expense of others, and appropriating the apparatus and power of the state to carry out its project.
This mechanism gradually erodes individual liberties and dismisses any divergent opinion: opposing the state is no longer simply having a minority opinion, it's opposing the common good, which is much more serious.
The expression of diversity ends up being criminalized, political parties banned. Quickly, the expression "New Man" appears to express the need to re-educate the recalcitrant to improve the human being. Lenin spoke as early as 1919 of the "new Soviet man" in a speech to the congress of young communists, which was even later conceptualized under the name "homo sovieticus". For Mussolini, the new man must be deprived "of his individuality in order to transform him into cellular elements of the national collectivity" according to Italian historian Emilio Gentile. Italian fascism even incorporated elements of eugenics to biologically and spiritually regenerate the nation8. For Hitler, "National Socialism is more than a religion: it is the will to create a new Man."
Captured by a small group of individuals, the state decides and plans the role that each individual and each resource plays in the pursuit of a common good whose very questioning of legitimacy is perceived as treason. This is the Road to Serfdom and totalitarianism.
This causal link between socialism and totalitarianism that Hayek describes found significant resonance, including among reputed proponents of economic planning and state intervention. In particular, Keynes, although opposite to Hayek in his philosophy and economic recommendations, greatly praised it in a letter he addressed to him in June 1944: "In my opinion, it is a great book... Morally and philosophically, I find myself in agreement with virtually the whole of it: and not only in agreement with it, but in deeply moved agreement."
Germany is the subject of Hayek's particular attention. In the 1880s, Chancellor Otto von Bismarck was a precursor in implementing the socialist doctrine regarding the role of the state, and put in place innovative social policies, such as health insurance, accident insurance, and old-age pensions. These measures aimed to stabilize society and strengthen state authority by responding to workers' needs.
At the same time, Germany, newly unified (1871), developed what Hayek calls a Beamtenstaat, or "state of officials," characterized by a powerful and centralized bureaucracy. This rigid administrative structure increased state control over society and gradually stifled individual initiative and freedom, paving the way for authoritarian forms of governance. Hayek's analysis emphasizes that the development of such a centralized bureaucratic state in Germany constituted fertile ground for National Socialism, illustrating the risks associated with an excessive concentration of state power.
Hannah Arendt, in "The Origins of Totalitarianism," shares this observation and highlights a chilling paradox. As the state arrogates to itself the mission of representing the common good, it destroys other competing intermediate social structures that could claim this mission and inspire loyalties, such as families, associations, or religious communities.
On religion, in particular, the difference between the liberal and social currents is eloquent: liberalism is secular, socialism is atheist. In other words, in liberal philosophy, religion is a private matter and the state does not intervene, while in socialist philosophy, religion is a social construction competing with the state, which can deviate from the common good or perpetuate inequalities, and should therefore be repressed.
When intermediate social structures are destroyed, the state ends up atomizing individuals, destroying any independent social fabric and resistance. This destruction leads to a society composed of isolated individuals, devoid of significant ties, and therefore more easily manipulable and controllable by totalitarian power. The quest for a perfect world then becomes the breeding ground for oppression.
Modern Democracy and the Liberal/Social Tension
At the end of World War II, the world had just overthrown three totalitarian regimes: Nazi Germany, Fascist Italy, and Imperial Japan. The USSR, at the victors' table, however, persisted for another half-century.
In Western democracies, the question of redefining the state's role arose again to avoid the excesses that led to what de Gaulle called "the great misfortunes of the World."
The advent of social democracies constituted an attempt to reconcile the traditionally liberal role of the state, that is, its function as guarantor of fundamental freedoms, with the socialist vision, that of an engine of progress and a tool for the common good. In this sense, the French constitution of 1946, for example, reaffirmed the Declaration of the Rights of Man and of the Citizen, which is liberal in essence, but added in its preamble a range of new social rights: the right to work, the right to social security, the right to education and culture, trade union and strike rights, and equality between women and men.
This fragile balance rests on the idea of reconciling individual responsibility and solidarity. However, to avoid falling back into the excesses denounced by Hayek and Arendt, the social aspirations of the State must absolutely be framed by safeguards.
Historically, one of the most effective safeguards against the totalitarian bulimic expansion of the State was simply the budget: with limited financial means, the State cannot interfere without limit in the lives of individuals.
But with the evolution of the nature of money over the last two centuries, the effectiveness of this safeguard has eroded, to the point of fearing the return of the Leviathan.
II. The State Without Monetary Safeguards: Sources of an Endless Appetite
Historically, numerous factors have limited states' ability to effectively supervise their territories and populations. Among the most decisive were the absence of centralized administrative or bureaucratic systems, as well as dependence on primitive communication technologies. These structural constraints forced sovereigns to largely delegate public affairs management to often autonomous local structures, thus creating hybrid forms of governance between central power and local elites.
The Difficult Financing of the Ancien Régime
Between the fall of the Roman Empire and the 15th century, the fragmentation of power in Europe well illustrates these limitations. The Capetian kings in France, for example, directly ruled only a small portion of territory (the royal domain), while the rest was under the control of vassals. These vassals enjoyed near-complete autonomy, collecting taxes themselves, dispensing justice, albeit in the sovereign's name, and raising troops. Some vassals were even more powerful than the king himself, who thus had to navigate complex domestic politics. The king had few means to supervise or compel his vassals to respect his orders, lacking a centralized bureaucratic network.
Before the invention of printing or modern communication means, the dissemination of orders, laws, and information was slow and unreliable. Messages had to be transmitted by horseback messengers, boats, or, in some cases, through rudimentary relay networks. These technical limitations slowed power centralization and favored the emergence of local practices.
These various constraints formed a sort of natural barrier to the action of the state or sovereign: even when they wanted to interfere in their subjects' private affairs, they could in reality do so only with difficulty.
It was only with the advent of modern bureaucracies, supported by technological advances, that sovereigns could reduce their dependence on local structures and exercise more direct control. The European Renaissance and the modern era mark a turning point in this evolution. We saw this with the German Beamtenstaat, for example.
In France, the absolute monarchy of Louis XIV in the 17th century is the incarnation of an extreme centralizing turn and a drastic reduction of counterweights to the central state. We remember the famous quote of the Sun King: "L'État, c'est moi" (I am the State).
However, despite the reduction of these administrative, bureaucratic, and technological counterweights, the budgetary safeguard remained. Wasteful management of public finances could rarely last long. A sovereign in this situation had to resort to either increased taxation or debt, two risky solutions for the country and even for the sovereign's life itself.
Taxation has long been an impractical solution, in addition to being effectively risky. First, for the reasons mentioned earlier: without a suitable bureaucratic apparatus, it is difficult for the state to simply collect a tax it would establish. Taxes were therefore mostly indirect. This firstly allowed for easier collection by relying on intermediaries who collected the tax on behalf of the state. Secondly, by integrating taxes into the prices of goods and services, they are less visible to the taxpayer, who tends to rebel less. Thus, salt or wine were readily taxed, tolls and customs were established, but direct taxes were little used.
Despite these precautions, each increase in fiscal pressure was a huge risk taken by the sovereign. Many tax revolts resulted in questioning the legitimacy of state power, from peasant uprisings to the Revolution.
In France today, Income Tax (IR), Corporate Tax (IS), and Value Added Tax (VAT) constitute the vast majority of tax revenues. But we tend to forget that these are extremely recent, having been introduced respectively in 1914 for IR, to finance the First World War, 1948 for IS, and 1954 for VAT. The first two are direct taxes, and VAT, although indirect, has the broadest base, applying to the consumption of almost all goods and services and to all consumers.
The other solution, debt, is hardly more attractive: its sustainability depends on creditors' confidence in the state, and interest rates can quickly become unsustainable, often around 8 to 10% for pre-revolutionary France. Indeed, the state must finance itself from those who have capital to lend, i.e., merchants or corporations, and especially banks from the Renaissance onwards, who much prefer to finance profitable economic enterprises rather than the often military and non-productive expenses of a state. For it was mainly to finance conflicts that states went into debt.
In peacetime, sovereigns tried to maintain a balanced budget as much as possible, but each major conflict created a gaping hole that was filled by debt, whose high rates weighed heavily on the treasury. This partly explains the limited duration and scale of conflicts before the modern era: war is so expensive that belligerents have an interest in ending it as soon as they have the opportunity.
Traduction of the figure 1:
-Military spending
-Peacetime trend
Traduction of the figure 2.
-Primary excess
-Debt service
According to Gérard Béaur, emeritus research director at EHESS and author of several works on the subject such as "Les crises de la dette publique XVIIIe — XXIe siècle" or "La dette publique dans l'Histoire," it was Saint Louis who first resorted to massive debt on behalf of the state in France. His successors continued to use this instrument and employed questionable methods to free themselves from it, from confiscating creditors' assets to persecuting Jews and counterfeiting, which gave Philip the Fair his nickname, the "counterfeiter king."
The French Public Treasury, officially created under Philip Augustus in 1190, defaulted twice between its creation and the reign of Louis XIII in the early 17th century. Then things accelerated as the state centralized and conflicts became more significant and global.
Between 1624 and the French Revolution, the state defaulted on its debt every 23 years on average. The state built a bad reputation as a payer and could no longer finance itself at reasonable rates. In 1788, on the eve of the Revolution, interest payments on the debt consumed half of the state's budget.
At the same time, England was financing itself at much lower rates, about half as much according to Guillaume Mazeau, lecturer in modern history at the University of Paris-1 Panthéon Sorbonne. This was despite its theoretically weaker tax base and the fact that it was not (yet) more powerful than France, which was then experiencing its "Grand Siècle."
Part of the explanation comes from the financial maturity of the neighbor across the Channel: the Bank of England, founded in 1694, facilitated the issuance and servicing of state bonds while creating a liquid bond market.
Another part of the explanation comes from what we discussed earlier: while France chose absolutism, centralization, and opacity in public finance management, its rival across the Channel had moved to a parliamentary system, where deputies monitored and published state expenditures: this was the budgetary safeguard, which had the significant corollary of reassuring potential debt financiers.
In France, state finances were then secret. Finance Minister Necker published the state of finances for the first time in 1781, aiming to show creditors that expenditures were exceptional and linked to recent wars. However, the people would remember the enormous annuities received by nobles and the various privileges granted to the aristocracy. Indeed, without budgetary control, arbitrary spending of public funds could be expressed without constraint. This publication would cost Necker his dismissal from the government.
Very quickly, the Assembly resulting from the Estates General proclaimed equality before taxation, and above all, confiscated the clergy's assets to use as collateral for its new financing system, the Assignats, one of the most significant experiments with fiat currency in French and world history. Before the assignats, the only major paper money experiment in France, Law's system between 1716 and 1720, had ended in total bankruptcy.
Initially planned as interest-bearing bonds guaranteed by the value of the clergy's assets, the first decree in December 1789 authorized the issuance of the equivalent of 400 million livres of assignats. For comparison, the state's total revenues in 1788 were about 500 million livres. From financial instruments, assignats would soon be transformed into legal tender.
To finance growing expenditures, these would be issued in astronomical quantities. Under Robespierre, it rose to a value of 3 billion livres per month. The Terror, war, and the attempt at a planned economy had to be financed...
The Directory, which succeeded the Thermidorian Convention, inherited both the debt and the state's incompetence in 1795: it increased the issuance rate to 5 billion livres per month, but promised to destroy the printing presses once a maximum of 30 billion assignats in circulation was reached, then 40 billion. In other words, each month, the Directory granted itself the equivalent of ten annual budgets of the pre-revolutionary state, outside of any control.
When the disastrous experiment with Assignats ended in 1797, the Directory proceeded with demonetization and a return to metallic currencies. The citizen who had trusted the State had thus lost 99.9% of their assets in the space of a few years. This period constitutes one of the very rare episodes of hyperinflation dating from before the 20th century.
We can thus see a rather intuitive link between this paper money experiment and the unlimited expansion of the Terror, and the invasive nature of the State in citizens' lives.
To free itself from the budgetary safeguard on its action, the State developed a fiat currency whose use it imposed on its citizens under constraint. In doing so, its action became unlimited, and its interference in citizens' private lives boundless.
This highlights the necessity of being able to rely on precious metals to reliably organize international trade and state action. From the end of the Directory, and of course under the Consulate, the French State would set things right, with the Germinal franc (5 grams of 90% silver).
The Progressive Establishment of the Gold Standard in the 19th Century
In the 19th century, the gold standard gradually established itself as the dominant monetary system, replacing the bimetallism that prevailed before. Bimetallism, based on the simultaneous use of gold and silver as monetary standards, had shown its limits due to fluctuations in the relative value of these two metals and the difficulty of maintaining a fixed exchange rate between gold and silver.
The British Empire, having become the world's leading power after the Napoleonic wars, was one of the first to officially adopt the gold standard in 1821, establishing a fixed parity between the pound sterling and a determined quantity of gold. This adoption strengthened confidence in the British currency and facilitated international trade. Other countries followed this example, notably Germany with the creation of the Goldmark in 1873, then France and the United States, thus consolidating the gold standard as an international norm.
At the same time, technological advances played a crucial role in the globalization of finance. In particular, the invention of the electric telegraph in 1837 by Samuel Morse revolutionized communications, allowing rapid transmission of financial information across the world.
Before the telegraph, this financial information traveled at the speed of physical means of transport, resulting in significant delays. With the telegraph, stock market news, commodity prices, and exchange rates could be communicated instantly between global financial centers. This speed allowed better synchronization of markets, reduced inefficient arbitrage, and increased liquidity. Investors could react more quickly to events, making markets more responsive and integrated.
In 1866, the first permanent transatlantic telegraph cable was laid, connecting Europe and North America. This achievement marked the beginning of an era where continents were connected in real-time, facilitating international trade and diplomatic relations.
According to Lyn Alden, American macroeconomist, in her book "Broken Money," this moment marks a fundamental break in the international monetary and financial system: the time to execute a transaction now approaches a second, while the time for effective settlement of the transaction continues to be constrained by the physical world, and is counted in days or weeks.
Concretely, it is much easier to establish an account in a bank in New York and another in London, then send various debit and credit instructions by telegraph, than to send shipments of gold across the Atlantic to settle each exchange.
The banking system has therefore largely evolved to adapt to this new situation. Central banks, like the Bank of England, consolidated their role as guarantors of monetary stability, regulating money issuance and maintaining sufficient gold reserves to ensure the convertibility of banknotes.
This period also saw the emergence of large international banking institutions, facilitating capital flows and financing large-scale industrial projects. With registry systems, and credit and debit tracking, having gained a substantial technological advantage over transactional systems constrained by the physical world, banks took on considerable importance: they stored gold in vaults, guaranteeing confidence in banknotes, and served as a practical, even necessary, intermediary for trade by establishing credit and debt relationships between countries.
In France, CIC was created in 1859, Crédit Lyonnais in 1863, Société Générale the following year in 1864, Paribas in 1872, Banque Populaire in 1878, Crédit Mutuel in 1882, Crédit Agricole in 1885. Quite a list!
The United Kingdom was not left behind: Chartered Bank was born in 1853, Standard Bank in 1862, and HSBC in 1865.
In the United States, Wells Fargo came into being in 1852, Goldman Sachs in 1869.
Thus, the gold standard, supported by technological progress and the expansion of banking networks, established an era of relative monetary stability and fostered sustained economic growth in the 19th century.
But above all, the gold standard constrained states to stay within their limits. Now framed by globalization, interdependence, and a monetary system based on gold, which was difficult to manipulate, states returned to a budgetary safeguard through currency. If a state was too lavish, it would deplete its gold reserves and quickly have to resort to borrowing, subject again to the good graces of creditors.
The United States in the 19th century perfectly illustrates this new situation.
American Budgetary Discipline: The Foundations of Global Superpower
After their independence, the United States inherited a substantial debt, about 34% of GDP in 1792, resulting from loans contracted to finance the War of Independence. The federal government then assumed the obligations of the former colonies, now states, thus consolidating the national debt.
The young independent state quickly imposed budgetary discipline on itself. The following graph shows the evolution of the American federal budget deficit between 1792 and 1914, expressed as a percentage of GDP.
Periods of conflict, such as the War of 1812-1815 with the United Kingdom, the Mexican-American War of 1846-1848, the Civil War between 1860 and 1865, and the Spanish-American War in 1898, led to significant increases in public debt.
In peacetime, however, regardless of the party in power, successive administrations strived to respect the budgetary mandate entrusted by voters and to reduce pre-existing debt as much as possible. This trend is best illustrated by President Andrew Jackson, who, in 1835, fully repaid the national debt.
The budgetary and economic statistics of the United States between 1800 and 1914 are simply extraordinary... for the 21st-century mind.
Looking at the period as a whole, the average annual inflation is 0%, and the annual deficit is also 0%.
Zero! Nothing! No inflation or deficit for over a century!
This is shocking when one is accustomed to hearing that there is no growth without inflation, and that deficit is healthy. For this absence of inflation and deficit did not prevent the United States from experiencing a period of absolutely extraordinary growth and innovation. The "Long 19th Century" (1815-1914) thus saw the emergence and deployment of two industrial revolutions, the airplane, the car, the telephone, photography and cinema, the electric light bulb, pasteurization, and radioactivity, but also societal processes such as the end of slavery.
During this period, however, the United States experienced several banking panics, notably those of 1819, 1837, and 1907, characterized by credit institution failures, economic recessions, and monetary fragmentation (thousands of different currencies circulated simultaneously on the territory, with each bank able to issue its own).
To attempt to remedy these instabilities, Congress adopted the Federal Reserve Act in 1913, establishing the American central bank, the FED. The latter was tasked with supervising and regulating banks, controlling interest rates, and ensuring system liquidity by serving as a lender of last resort to prevent banking panics. This institution marked a turning point in the economic management of the United States, introducing a new era of centralized monetary policy.
World War I and the Suspension of the Gold Standard
On the eve of World War I, all the major powers involved had a central bank: Great Britain (founded in 1694), France (1800), Russia (1860), the Ottoman Empire (1863), Germany (1876), Austria-Hungary (1878), Italy (1893), and, as we just saw, the United States (1913).
Faced with colossal military expenditures, the engaged governments suspended the convertibility of their currency into gold from 1914 and resorted to borrowing from their population.
The United Kingdom, for example, issued war bonds in 1914, with more attractive rates than the market, and appealed to savers' patriotism.
The country needed to borrow the equivalent of a full year of GDP. However, the debt raising was a resounding failure: less than a third of the financing objective was gathered, from a very small number of investors. But if this became known, enthusiasm for the war might wane, and it could compromise future debt raisings.
The Bank of England then decided to create ex-nihilo the difference, to grant foreign currency loans to two high-ranking officials of the institution, who took charge of filling the bond issue with this fresh money.
This operation, which furiously recalls the episode of assignats in France, was described by the economist Keynes, who was in on the secret at the time, as a "masterful manipulation". When the Bank of England published the archives revealing this manipulation in 2017, the famous Financial Times newspaper was forced to issue a mea culpa 103 years late, as they had headlined at the time that the fundraising had been a success!
The British did not want to finance the slaughter, neither through tax nor through debt. It would therefore be through an opaque, undemocratic, spoliatory means that breaks the social contract.
For obviously, the price to pay is the loss of currency value through inflation. The promise of the gold standard was broken: the issued bills were not worth the promised quantity of gold, since one cannot invent gold stocks as easily as bills. This "masterful manipulation" allowed the mobilization of considerable resources to prolong what would become the greatest butchery in History.
While the assignats episode had been confined to France, during World War I, this practice became generalized on a global scale, with the exception of late belligerents such as the United States, marking a break with previous budgetary discipline. While the quantity of money in the economy closely followed GDP growth throughout the Victorian period, the two indicators completely diverge: when GDP falls by 5% between 1913 and 1921 in the United Kingdom, the monetary base is multiplied by 3.
With 3 times more money for a declining quantity of goods and services, punishment is quick to arrive: between 1913 and 1920, the pound loses 60% of its value. The franc loses 70% of its value over the same period. Germany enters a hyperinflation that purely and simply destroys its currency in the 1920s.
Inflation, which was exceptional a century earlier, becomes the norm. Thanks to the emergence of a major banking system and powerful central banks, states had just found the magic formula to bypass their budgetary constraints: money.
And unlike Philip the Fair, who had already tried the exercise, the practice no longer had many logistical constraints, as all the gold was centralized in a few institutions, within the state's coercive reach. Would World War I have lasted 4 years if states hadn't circumvented their budgetary mandates?
Creditors and victors, without having suffered major destruction, the United States, after the war, find themselves with a substantial stock of gold, with nearly 40% of world reserves. This influx of gold contributes to an economic boom, a rise in the power of the dollar, and accessible credits that favor the creation of a bubble on stocks whose epilogue will take place with the crisis of 1929, which can be interpreted as the culmination of the imbalances created by World War I.
War debts, the weakening of Germany, clumsiness in returning to the gold standard, and the disorganization of world trade prepared the ground for economic collapse. The war thus caused a profound rupture in the world economic system, and the interwar period was a poorly mastered attempt to rebuild this order, ultimately leading to the Great Depression.
World War II would simply drive the point home. The belligerents resume the recipe that has already "worked well". The drug has become too easy, too tempting. Thus in the United Kingdom, we see the return of the divergence explained above. Between 1940 and 1946, British GDP contracts by 1%, while the monetary base doubles.
This is too much for the European states, exhausted and devastated, who hand over the keys of the international monetary system to the United States in 1944 at the Bretton Woods conference. The gold exchange standard is established, which means that only the dollar is convertible to gold at a fixed rate, 35 dollars per ounce, while other currencies are convertible to dollars. The United States essentially becomes the world's Central Bank.
Obviously, this immense power will prove too tempting for a nation that had made budgetary seriousness its signature. With Lyndon Johnson's enormous social programs and the Vietnam War, by 1970 the United States had issued 24 billion dollars held by third countries, supported by only 11 billion dollars in gold reserves according to the IMF.
When comparing the budgetary habits of the United States between the period preceding World War I, which we studied earlier, and the period between 1950 and 1970, one thing stands out: budget surpluses become rare and exceptional.
While the average annual inflation and deficit were zero for over a century, they change completely during this period. Between 1950 and 1970, the average annual inflation is nearly 2.6%, while the average annual deficit rises to nearly 1.1%.
The Nixon Shock and the Transition to Fiat Currency
In 1971, U.S. President Richard Nixon, observing the loss of confidence from other states regarding the sustainability of the American currency situation, announced the suspension of dollar convertibility to gold, an event known as the "Nixon Shock".
This decision marked the end of the Bretton Woods system. The shift to a floating exchange rate system formalized the widespread adoption of fiat currency, whose value is based on trust in issuing governments rather than on metallic reserves.
This transition had significant repercussions on states' fiscal policies.
Freed from the constraints imposed by the gold standard, governments, notably that of the United States, were able to issue currency and incur debt more freely, without the need to maintain proportional gold reserves7. This increased flexibility led to a notable expansion of public spending and an increase in budget deficits. The new norm slipped further. Since 1971, in the United States, the average annual inflation has been 3.56%, and the deficit 3.52%.
In France, this evolution has translated into an uninterrupted succession of budget deficits since 1974.
That year, the state budget recorded its last surplus, with a positive balance of 0.1% of GDP. Since then, public expenditures have systematically exceeded revenues, leading to a gradual accumulation of public debt. France's indebtedness has increased from 14.5% of GDP in 1974 to approximately 110.6% of GDP in 20237.
To attempt to contain these excesses, the European Union established mechanisms aimed at framing the budgetary policies of member states. The Maastricht Treaty, signed in 1992, set convergence criteria, notably a public deficit limit of 3% of GDP and public debt not exceeding 60% of GDP. These figures are purely arbitrary and already a defeat in themselves: establishing a 3% deficit limit is actually encouraging states to aim for a 3% deficit! Germany, marked by the hyperinflation of the 1920s, particularly insisted on implementing these criteria to avoid free-rider behaviors within the Eurozone, where some states would incur debt by riding on the credibility of a common currency.
The creation of the European Central Bank (ECB) in 1998, as an independent institution, aimed to guarantee price stability and avoid monetary financing of public deficits. However, in practice, the ECB's independence has been tested, particularly during the sovereign debt crisis in the Eurozone.
Faced with pressure from financial markets and the risk of default by some member states, the ECB implemented public debt repurchase programs on the secondary market, such as the Securities Markets Programme (SMP) in 2010 and Quantitative Easing (QE) from 2015. Prohibited from financing public deficits, the ECB circumvents treaties by guaranteeing private actors the repurchase of public debt securities on the secondary market. The result is the same: there is no longer a budgetary safeguard because there is no longer a monetary safeguard. The state is free to incur as much debt as it wishes, being guaranteed that its debt will be bought back by a central bank that cannot go bankrupt.
The fragile balance that existed between the liberal role and the social role of the state is thus broken.
Without a monetary safeguard, the social role is no longer constrained and can resume its bulimic and clientelist expansion. The direct consequence is the collapse of the liberal role, that is, the state's inability to guarantee fundamental freedoms.
III. The Return of Leviathan, or the Highway to Serfdom
With the gradual disappearance of the state's liberal role comes the fear of a return to the situation prior to the emergence of liberal philosophy, to Leviathan, or to the immediately subsequent one, where the unbridled implementation of the idea of a Social State leads to totalitarianism. This "highway to serfdom" unfortunately seems to have already been taken by modern democracies.
The Collapse of Proportionality in a Democracy Without Budgetary Limits
The tension between the liberal foundation and the social role of the state is enshrined in the legal principle of proportionality. For the European Union, this principle is stated in Article 5 of the Treaty on European Union: "Under the principle of proportionality, the content and form of Union action shall not exceed what is necessary to achieve the objectives of the Treaties."
In liberal democracy, indeed, freedom is the norm, and constraint, the exception. Any restriction must be strictly justified: it must demonstrate its effectiveness, ensure that its side effects do not outweigh its benefits, and limit itself to what is necessary to achieve its objective. The principle of proportionality is thus one of the pillars of liberal democracies. It ensures that the means employed by the state to achieve an objective do not disproportionately infringe on citizens' fundamental rights.
Let's take a simple example: banning alcohol while driving. This restriction is justified by data showing the direct link between alcohol and serious accidents. It is proportionate because it only targets situations demonstrated as risky. And it is evaluated by monitoring the number of road accidents and their mortality.
On the other hand, installing a police officer in every house, although probably effective in reducing domestic violence, would be a disproportionate infringement on privacy and individual freedom. But above all, from a practical point of view, installing a police officer in every house would represent an astronomical cost that the community is not ready to finance, when the promise of social benefits does not appear so obvious. For every euro allocated to placing a police officer in each individual's home is one euro less allocated to other actions. The efficiency of spending, that is, the ratio between the euro spent and the benefit to society, is a crucial criterion. Society therefore prefers to accommodate a certain degree of crime to allocate its common resources to actions with a greater impact.
However, this precious proportionality disappears when the state has unlimited means.
When the budgetary constraint fades, the prioritization of priorities, yet essential in democracy, becomes superfluous. The question is no longer posed in terms of adequacy or proportionality of means with regard to the objectives pursued, but solely of the supposed virtue of these objectives. If the objective is "good," everything must be allowed to achieve it. Refusing to vote for a measure then amounts to being accused of supporting "evil."
The fight against money laundering and terrorist financing is the perfect example of this perverse dynamic. Initially justified by laudable objectives, it has gradually degenerated into an uncontrollable machine, crushing fundamental rights under the weight of unlimited means.
Regulations such as KYC (Know Your Customer) and AML (Anti-Money Laundering) procedures impose systematic surveillance of financial transactions. But these measures, which violate privacy and restrict access to financial resources, have never demonstrated their effectiveness. Barely 0.5% of global criminal money is seized thanks to these devices, while compliance costs exceed the economic benefits they seek to protect. In Europe, for example, the annual cost of anti-money laundering regulations (144 billion euros) exceeds the total value of targeted criminal money (110 billion euros).
Figure 10: Pol, R. F. (2020). Anti-money laundering: The world’s least effective policy experiment? Together, we can fix it. Policy Design and Practice, 3(1), 73–94. https://doi.org/10.1080/25741292.2020.1725366. For Europe, we find the figure of 110B generated by crime. The scenario in dark gray is the reference scenario of the study, in which 50% of asset confiscations are attributed to financial surveillance policies. In this scenario, €600M is recovered, for a compliance expenditure of €144B, which is an efficiency of 0.4%. At the global level, this efficiency drops to 0.05%.
But opposing these measures is presented as implicit support for terrorism: if one doesn't support the implementation of anti-money laundering and anti-terrorist controls, it must mean that one supports criminals, right? The argument of proportionality becomes inaudible.
More recently in Europe, the implementation of Chat Control, an unprecedented threat to citizens' fundamental freedoms, curiously finds no significant opposition, nor echo in public debate. If this provision were to be implemented, all European communications would be placed under surveillance. A totalitarian project that should frighten any citizen, and offer a boulevard to the first politician who would make it a battle horse, sure to find significant support in the population!
Yet this is not what we observe. The few opponents of the text are quickly labeled as endorsements of child pornography. The debate on the proportionality of the measure is completely eclipsed, in favor of an ethical debate on the stated objective of the text: fighting against child abusers. Opposing the text is thus supporting pedophiles. The political boulevard turns into a dead end, and elected representatives therefore desert this subject, for fear of losing their image, support, and career.
The mechanism unfolding here will be familiar to the reader: it's the same as that described by Hayek in The Road to Serfdom. Opposition to the State, or here to the European Union, is no longer simply a political divergence, but a betrayal, a support for "evil."
The consequences of this excess are already manifesting in several democracies.
In 2022, in Canada, during the truckers' protests, the government froze bank accounts of participants and donors under the pretext of fighting against illegal financing. These measures, taken without a clear legal basis, were enough to stifle the protest. Whether one agrees or disagrees with the protesters' demands is not the issue: the freezing of financial assets has become a political weapon against dissent, a dangerous shift for any liberal democracy.
In India, in 2024, the freezing of accounts of the main opposition party paralyzed its activities during a crucial election campaign. In a few weeks, a government in place was able to silence its main opponent.
Financial censorship, often associated with authoritarian regimes, now finds its place in formerly liberal democracies.
Recent cryptocurrency regulation follows the same pattern.
On May 14, 2024, Alexey Pertsev, a computer developer who built an Open Source tool to preserve online confidentiality, was found guilty of money laundering and sentenced to more than 5 years in prison by a Dutch court. In the court's decision, one can read the following: "The tool developed by the suspect and his co-authors combines maximum anonymity and optimal concealment techniques on the one hand, with a serious lack of identification functionalities on the other. The tool therefore cannot be characterized as a legitimate tool that has been inadvertently used by criminals. By its nature and operation, the tool is specifically intended for criminals."
Seeking to preserve one's confidentiality is thus at worst proof of criminality, at best complicity in crime. Yet confidentiality is guaranteed by the Universal Declaration of Human Rights: "No one shall be subjected to arbitrary interference with his privacy, family, home or correspondence, nor to attacks upon his honour and reputation. Everyone has the right to the protection of the law against such interference or attacks."
The State, freed from any budgetary constraint, arrogates to itself a permanent right to monitor, sanction, and control, often at the expense of fundamental rights.
Financial surveillance shows how uncontrollable this dynamic has become. It is no longer criminality that is being fought, but freedom itself, because freedom necessarily involves risks to this or that moral or ethical value. A democracy without proportionality is nothing more than a facade, where "virtuous" objectives mask a systematic erosion of individual liberties.
Magic money, far from emancipating democracies, inexorably leads them on the path to a modern Leviathan.
The Loyalty Point Society
Beyond the legislative aspect, the emancipation from budgetary constraints through monetary excesses necessarily translates into one of the most obvious dimensions of the State with regard to its social role: the multiplication of subsidies and support mechanisms, for individuals as well as businesses.
The welfare state has always sought to ensure that the social benefits it distributes are used in accordance with their initial objective. This concern stems from the need to guarantee that public money truly benefits those who need it and for the intended uses.
Each year, debates emerge concerning the use of certain allowances. For example, the back-to-school allowance, intended to help families cover school-related expenses, is the subject of controversy when it is suggested that it could be spent on purchases unrelated to education, such as televisions or game consoles.
Faced with the complexity of verifying the use of funds, the State has developed alternative mechanisms in the form of specific vouchers, restricting the use of certain resources (or "earmarking" them) for predetermined purposes. Rather than providing direct monetary aid, leaving individuals the freedom of choice, we are witnessing a multiplication of these conditioned instruments. We can mention here Restaurant Vouchers, the Culture Pass, the Digital Pass, Holiday Vouchers, the Personal Training Account, and many others.
The Culture Pass, for example, is a flagship device launched in 2019 as a test, then in 2021 throughout the territory, to facilitate young people's access to culture, particularly in disadvantaged environments.
In December 2024, the Court of Auditors issued a report on the device. While the majority of young people used the device (84%), the Court notes, however, numerous problems.
Firstly, the 16% of young people not using the device unfortunately correspond to the target population: they are young people who "correspond to audiences least familiar with cultural practices."
Secondly, the creation of a public money windfall for a targeted destination ("culture") instantly created a windfall effect, and an offer, not always of quality, developed to come and tap into this money. The Court of Auditors calls for "vigilance on the diversity and quality of the cultural offer" and laments that "the quantitative objective — maximizing the number of young beneficiaries — prevailed over the concern for quality of offers, whose plethoric number of 36,000 shows the lack of selectivity." 16 million euros thus went to finance "escape games," which the Ministry of Culture has since asked to be delisted.
Thirdly, major players have benefited from the implementation of the scheme. Of the total sales volume generated by the Culture Pass between 2019 and 2024, 15% was made by Fnac, and 7% by Pathé/Gaumont cinemas. The Court thus emphasizes that the pass's success came at the expense of... live performances.
The Public Sénat article concludes as expected: "At the beginning of November, the resigning Minister of Culture Rachida Dati had indicated her desire to redirect the use of the pass towards live performances and the press, during the examination of the 2025 budget. For Pierre Moscovici, the State must now 'give itself the means to steer the Culture Pass'. 'With public funding, public management,' summarizes the first president."
And here we are, from a good intention of universality of the Pass and free offer, sliding towards "steering" and "public management". Understand: the State will hasten to restrict this Pass to particular public sociologies, and to define what constitutes good or bad culture, further reinforcing clientelist temptations, both on the voters' side and on the side of cultural world providers.
Temptations to constrain, but also to buy social peace, or to reward groups of this or that ideology.
Does the taxpayer know, for example, that the Culture Pass does not allow attendance at live performances at the Puy du Fou park, with its marked right-wing and Catholic orientation, but which saw its integration request to the Pass rejected despite worldwide awards for the quality of its show offer, while this same Culture Pass allows the purchase of an entry to the Fête de l'Humanité, marked on the left and not known for its cultural offer but rather its political one?
A marginal problem, you might say? Unfortunately, with a budget of 244 million euros in 2024, the Culture Pass occupies "second place among structures funded by the Ministry of Culture after the National Library of France". Uncontrolled expenses, which, each year, exceed the planned budget envelope.
Especially since in November 2024, the newspaper l'Informé revealed the lifestyle of the company in charge of managing the Pass: offices near the Champs-Elysées for 1.2 M€ per year, increase in staff from 130 to 166 employees, payroll increasing by 41% over the year, giving an estimated average salary of over 60,000€ per year, etc. The company's operating costs swallow up more than one euro out of ten of the public money allocation initially dedicated to young people.
A similar analysis could be made on the well-known Restaurant Vouchers.
Created in 1967 to facilitate employees' access to balanced meals, these have seen their use broaden and become more complex over the decades. Originally intended for paying for meals in restaurants, their use has been extended to the purchase of food products in supermarkets, particularly for immediately consumable foodstuffs. This extension was temporarily broadened in 2022 to include all food products, to support purchasing power in the face of inflation.
On the company side, restaurant vouchers are exempt from employer contributions and deducted from taxable profit. On the employee side, the employer's share is exempt from income tax. It is therefore indeed the State that partly finances the scheme.
To transform money into tickets, before transforming it back into money at the restaurant, the necessary complex system involves costs: between 2 and 5% for restaurateurs, who must pay the operators of the system, not to mention SMEs that must manage the system for their employees.
At the end of 2024, as the expansion of the scheme including all food products was coming to an end, the debate on its extension was rekindled.
The restaurant industry, strongly opposed to preserving the subsidy that the restaurant voucher represents for its sector, firmly opposed the perpetuation of the expansion scheme. However, from a "citizen" point of view, one could say that if the objective is to promote food security for beneficiaries, there is no problem with the voucher being used to buy pasta or rice.
As with each subsidy, a corporatist conflict ensues to determine who can collect taxpayer money. In this case, restaurateurs defend restaurants, while large retailers defend packets of pasta in supermarkets. The restaurant industry therefore proposed the creation (sic) of a separate "food voucher", allowing it to preserve its turf, but to give more money for food purchases in supermarkets.
We don't yet have the epilogue to this case, but it is symptomatic of what I call the loyalty point society.
Rather than paying a salary or remuneration that the citizen can then freely decide how to allocate, the State, taking charge of the "common good", intervenes and creates a complex system to serve this or that interest. It takes the opportunity to impose its vision of the common good on the population: here, we are already talking about "sustainable" food vouchers, for example.
The intention, as usual, is laudable. But who can define "sustainable"? It's worth remembering here that if there hadn't been a war in Ukraine in 2022, the European Union would have excluded nuclear power from the "green" taxonomy, considering it a polluting industry. Public authorities can also make mistakes.
With a normal budgetary constraint, such absurd schemes could never see the light of day, or at least take on significant scale.
Would the taxpayer tolerate being told that hundreds of millions of euros have gone into nonsensical schemes to direct consumption and restrict individual freedoms by favoring various corporations, when there is a fairly simple tool that allows citizens to spend as they wish, and which is called currency? And above all, that because of these expenses, we couldn't recruit healthcare or educational staff? Or that we're going to ask them to contribute more?
With a limited budget, consisting mainly of taxes to which citizens have consented by vote, the State is obliged to arbitrate its expenses by prioritizing its missions. It cannot expand indefinitely without facing disastrous consequences.
Conversely, whether with the Culture Pass, restaurant vouchers, or all other such schemes, the State, emancipated from its budgetary constraint, is tempted to multiply their number in order to satisfy its social bulimia, but also to strengthen control, paying little heed to fundamental freedoms mortgaged in the process, by orienting behaviors according to predefined schemes... by itself. It transforms citizens into passive consumers of labeled services, limiting their autonomy and ability to make personal choices.
In this sense, in a recent article in Les Echos, economist Xavier Jaravel defends, for example, the creation for all citizens of an account at the Central Bank, accompanied by a payment card where credits could be made with an expiration date: "Individuals would have a few weeks to use the funds, after which the remaining balance would be lost." For Jaravel, this would be gratifying as it would constitute a "credible commitment to higher inflation". We rejoice in a commitment to destroy citizens' savings each year and force economic agents to consume, and to hell with sobriety and the environment...
Through this prism, it becomes easy to understand the interest of a significant part of statist economists and politicians in the ECB's latest fad: the digital euro.
Yet another "gizmo" that Europe is known for: nobody needs it, nobody knows why it's being developed, nobody can even define it, but since it's funded by public money, we'll do it anyway.
On the agenda, no identifiable benefit, but a range of risks whose materialization is perfectly credible, given the rare experiences worldwide, and particularly in social credit China: traceability of expenses, melting currency, expiration date, targeting of expenses according to a given agenda.
The very fact that there are people in Europe defending this project should be a source of horror. That these people are not immediately isolated and criticized for such positions is probably even worse...
This normative proliferation and these conditioned devices fragment society into a multitude of individuals subject to complex rules and increased controls. Far from strengthening social bonds, this excessive bureaucratization isolates citizens, making them dependent on the State for the satisfaction of increasingly specific needs. The constant surveillance, justified by the need to control the correct use of these vouchers and passes, engenders widespread mistrust, reducing the space for individual freedom.
We could, moreover, beyond vouchers and passes, analyze the current normative and technocratic drift of the European Union from this angle, and its desire to regulate every aspect of citizens' lives to orient it towards what it considers to be the common good.
The tension, or balance, that had been proposed by social democracy after the war is increasingly difficult to maintain. The unlimited expansion of the social role of the State — subsidies, safety net, regulations — inexorably erodes economic and personal freedoms. Massive budget deficits, financed by magic money and not by taxes, illustrate this unbalanced dynamic where the State always promises more without being accountable.
When budgetary safeguards disappear, the risk is no longer just a financial crisis, but also an erosion of democratic freedoms.
The dream of an omnipotent welfare state slowly transforms into a bureaucratic nightmare, where the state machine slowly but surely grinds what it claims to protect: freedom.
The Renaissance of the Liberal Project Through Monetary Critique
The liberticide excesses of modern democracies are not merely historical accidents or the fruits of ill-inspired political decisions. They find a structural part of their origin in the monetary mutations of the 20th century.
The progressive abandonment of traditional monetary safeguards, symbolized by the advent of fiat currency, has allowed states to free themselves from budgetary constraints and, with them, the natural limits that tempered their power. This dynamic has led to the gradual erosion of individual liberties and the rise of omnipresent surveillance, exacerbated by the growing centralization of monetary authority.
In this context, the liberal project, founded on limiting state power and defending fundamental rights, seems to have lost its coherence. By ignoring the monetary foundations of state drift, it leaves intact a mechanism that makes Leviathan's excesses inevitable. Modern liberalism cannot therefore exist without a profound critique of fiat money and without a concrete alternative.
This alternative is Bitcoin. By design, Bitcoin reintroduces scarcity and monetary discipline in a world dominated by unlimited money creation. It offers a decentralized currency, resistant to censorship, and impervious to state interference. And Bitcoin is much more than a simple monetary tool: it embodies a new philosophical ideal, a proposal to rebalance powers between individuals and institutions.
Above all, it solves the problem of gold, whose demonetization was largely due to technical contingencies: with the invention of modern means of communication, the practicality of storing gold with third parties to favor the use of banking intermediaries and credit easily prevailed over the physical constraint of its transport.
Both a payment system natively available on the Internet and a monetary token replicating the scarcity of the yellow metal, Bitcoin is digital gold, capable of circumventing the issues that led to the demonetization of gold in its time, and its appropriation by increasingly irresponsible, wasteful, bulimic, and consequently, liberticide states.
For younger generations, who are witnessing the failure of traditional institutions and the decline of liberties, Bitcoin represents a path of hope compatible with a "digital native" lifestyle. It offers the possibility of rebuilding an economic and political framework compatible with the ideals of autonomy and individual responsibility, at the heart of the liberal project. In short, it is through Bitcoin that the liberal project will become attractive to youth.
Bitcoin is therefore one of the keys to the renaissance of liberalism. Without it, this current of thought remains incomplete, incapable of tackling one of the structural causes of contemporary liberticide excesses.