The recent French riots appear to be heavily orchestrated rather than a spontaneous, organic outburst of public discontent.The real underlying issue is the deteriorating French government debt markets—particularly the short- and long-dated bonds (such as the 1-year, 2-year, and 30-year maturities)—which face serious stress due to excessive debt levels.Authorities do not want widespread attention on these debt problems. If the public does notice, the preferred narrative is that any market turmoil is simply a reaction to the riots and social unrest, rather than a reflection of unsustainable borrowing and fiscal deterioration.In this context, there is a risk that policymakers will respond to the debt pressures by expanding the money supply further. To offset the immediate inflationary impact of that new money, they may impose martial law, travel restrictions, or lockdown-style measures.These restrictions would suppress demand in the short term, potentially accompanied by the failure or distress of a counterparty bank or other financial institution.The resulting chaos would serve as cover for channeling fresh liquidity primarily to favored large banks (the “bulge bracket”). Through the Cantillon effect, those who receive the new money first can deploy it to acquire assets before broader price increases occur, concentrating the benefits among the chosen institutions.
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