France needs to FREXIT

France can no longer afford to be in the Euro Zone as its weak economic growth and large budget deficits cannot be sustained in the ECB’s tight money framework.  France is running a budget deficit of almost 6% and debt to GDP is projected to be above 120% by next year.  Meanwhile economic growth is anemic at .5%.  Frances budget deficit is twice the Euro Zone guideline of 3%.  The ECB is pursuing an irrational monetary tightening as inflation is solely being driven by higher energy prices not excessively low rates or large increases in the money supply.

France cannot afford to live in the Euro Zone’s tight money regime with an arbitrarily low inflation target of 2% and a single mandate central bank.  Historically, real economic growth is higher when countries run inflation in the 3-4%.  France needs to run a more liberal monetary policy to drive more real economic growth and start to get its debt to GDP ratio under control.  There is no political desire to move to a more austere spending plan as dictated by the German dominated Euro Zone model.  Consequently, France should Frexit and control its own economic future and bring its budget deficit under control by pursuing a more growth oriented monetary policy.