"Off with his head!"

The greed of King Louis XVI was unmatched.

His royal court consumed France’s wealth at an astonishing rate. His household staff numbered four thousand people, and his personal cadre of bodyguards almost twice that amount. Thirty servants alone were employed to serve the king dinner, of which four had the sole duty of ensuring his wine glass remained filled.

Seventy-five priests and clergymen tended to his personal spiritual needs, over a hundred musicians made up his private troop of entertainers, fifty doctors were responsible for his healthcare, and nearly two hundred attendants managed his wardrobe, hair, and ensuring the ruler was always adequately daubed with sweet-smelling oils

Excessive expenses, even for a monarch.

Louis’ ravenous desire for indulgence, as well as his secret spending of tax dollars to support the Holy Roman Empire, would wreak havoc on the economy of his nation. And of course, also destroy the overall financial wellbeing of his people.

But his mismanagement would eventually come to an end.

Louis XVI’s destiny was to be the final king of France. After a thousand years of a ruling monarchy, he was beheaded during the French Revolution in January of 1793, on charges of conspiring with foreign powers against his own nation.

But Louis’ damage to France’s economy had made its mark. Short of funds, the new French government printed billions of its new currency the assignat, in order to raise funds.

A small number of officials in France’s newly-assembled government—including Jacques Cazalès and Nicolas Bergasse—attempted to oppose this measure on economic grounds, believing it would only cause significant depreciation of the currency, and a future fiscal calamity. But their voices were in the minority, and their objections were dismissed; the majority believed the basic principles of money wouldn’t apply to the nation, as France’s immense landed wealth would provide security against any form of inflation.

But the majority was ruinously incorrect. Because history always shows that the immutable laws of money never change.

With so many assignats flooding the market, the value of the currency plummeted. By August the same year of Louis’ death, the value of the assignat had depreciated by sixty percent. Two years later, ninety-nine percent of its value had been wiped out.

The situation was dire, but the government continued in its attempt to make the populace believe there was nothing to worry about. And at the same time, forcing the population to use the assignat, creating a ban on trading them in for gold francs, or by using other means of exchange.

But the damage to the assignat had been done. Knowing its currency experiment had failed, France’s new government le Directoire abandoned the assignat and created a new paper currency in its place called the mandat. It entered the market in February 1796, with the government promising there would be no economic stress this time around.

Again, they were wrong.

The mandat was a spectacular failure. In desperate need of funds, the government printed more of the mandat until a mere six months after its inception, its value had been slashed to only three percent of its initial worth.

In just six years, the French government had destroyed the value of two entire currencies, and resigned them to the history books. And it wouldn’t be until almost a decade later when the nation’s new Premier Consul Napoleon Bonaparte would restore a modicum of temporary monetary stability, by creating the 20 franc gold piece in 1803.

History, as we all know, has a habit of repeating itself.

Right now, France is experiencing significant inflation again. Although not as bad as during the Revolution, as I write this it’s at 5.8%; the highest number in 37 years. But Francois Villeroy de Galhau—the Bank of France’s governor—says there’s little to worry about, as the nation’s economy is resilient.

Across the Atlantic, the United States is in a recession. Or at least, it should be.

Although there are several definitions, a recession has generally been classified as two consecutive quarters of economic retraction. As of a few days ago, the official figures are in: over the past two quarters, the US economy has officially retracted, and stopped growing.

So, it’s a recession then.

Well, not according to the government it isn’t.

In an obvious move to avoid the sitting administration taking the fall, Treasury Secretary Janet Yellen has suggested a recession won’t be announced—stating the country won’t abide by the existing definition, as the economy remains “resilient”. There’s that word again.

Now, considering the US is experiencing the highest inflation in 41 years at 9.1% (and growing), I’m not sure I share Yellen’s optimism, or her belief in her economy’s resilience.

The debate around the definition of a recession, and Yellen’s refusal to announce one, is so furious that Wikipedia had to block its page for “recession” from any new edits. Mostly, due to the very politically charged conversation it was attracting.

Look, I’m not attacking the current administration in the US specifically, or France’s sitting economic leadership—to me, this isn’t an issue that defines particular political parties. Instead, it’s a perfect example of how political leaders as a whole will say whatever they please, even changing the very definition of what a recession is, to avoid taking the blame for an economic situation that exists while they’re in power.

And just like France’s government did during the revolution, they’ll keep making the same financial blunders as always, while manipulating us into believing that nothing is wrong, as they speak falsehoods with silver tongues.

They don’t care about the economic success of the people, or providing the truth. Instead of delivering the difficult news that we should hunker down for an economic slowdown, and make financial choices to prepare for that, they instead tell us it’s all nothing to be concerned about.

Mostly, I believe they only do this in an attempt to save their own skin, so they don’t have to take the fall for a situation they’ve helped create, due to the insane amount of money printing that’s gone on these last few years.

Or in other words, we’re on our own.

Although I’m mentioning the US here, don’t get comfortable thinking that a recession in the United States won’t affect the rest of the world. The subtle nuances of international trade, and the Dollar’s status as the planet’s reserve currency, mean we could all be in for some tougher times ahead. Even here in Europe, where economies have started to grow slightly again, we won’t be completely out of the woods for a while yet—likely, for several years.

So, what can we all do?

Well, of course, there’s the simple stuff. Create a budget, cut non-essential costs, contact your bank and try to get better terms on your loans, or negotiate your monthly bills with your energy and phone company. As for the bigger picture, it’s possibly a good time to ensure that your investments are as diversified as possible, and that you maybe don’t have a lot of cash sitting around that’s being destroyed by inflation.

Do something, anything, except to blindly believe that things aren’t as bad as some are saying they are.

Because the numbers don’t lie. And neither does history.

Economically, the world is in a bad state, and you should be taking action to hunker down and wait out the storm. But your leaders won’t tell you that. Because to do so would be to take the blame for something they’ve helped cause.

Sure, we may be on our own. But that also means we have the power to control our own financial destinies.

Leon Hill.
Co-founder, Abundantia.

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