Eurozone money falls for the first time since the Great Recession and puts pensions on alert

2023-08-30 09:55:37

George Bernard Shaw (1856-1950), the Irish playwright who won the Nobel Prize for Literature (1925) and author of Pygmalion, ironized that “money is nothing, but a lot of money, that is something else.” A lot of money is circulating – money supply in technical terms or “M3” – in the euro area and a lot of money, more and more, costs pensions in Spain. They seem disparate issues, but they are and will be related. The M3, which is not a ring road, includes all deposits, loans and cash in circulation and also some financial instruments. In other words, the money that is available, in this case in the euro zone. For the first time since the Great Recession and for the second time in history, that money has dwindled. Barely 0.4% compared to last year, which may seem like a trifle, but the absolute figures may clarify the magnitude of the matter. In July 2023, the money available in the euro zone reached the unimaginable figure of 15.99 trillion, with “b” for a lot, of euros. A year earlier, the amount was 16.17 trillion. That is to say, there are 180,000 million less and the tendency, the result of the forced fight against inflation, is for it to be further reduced. It cannot be forgotten that since the start of the pandemic, the M3 has increased by three trillion euros, which is what partly explains the inflationary phenomenon.

In the month of August, the Spanish Social Security (SS) paid a record of 12,039 million euros in pensions, 10.9% more than in the same month of the previous year. This means that, at the end of 2023, the account will reach 170,000 million, that next year it will be more and that the income from social contributions is not enough to pay them. The Spanish SS, beyond the accounting and dialectical balances of Minister Escrivá, is deficient and that is where the matter is linked to the decrease in money available in the eurozone. In recent times, the State covers the hole of the SS, but to do so it has to go into debt. Until now it was easy to obtain money and at ridiculous prices, but everything has changed. There is less money and, of course, it is more expensive for everyone, and when “it is a lot, that is something else” said Bernard Shaw.