Rachida Dati’s Freudian Slip on the Need for Inflation

In France, this video of the former French Justice Minister and current European parliamentarian Rachida Dati is making the rounds. If you speak French, you’ll know why when you hear Dati’s word choice 14 seconds into the video.

She told Canal Plus: "I see some [foreign investment funds] looking for returns of 20 or 25% at a time when inflation is close to zero."

That type of return clearly unrealistic in this environment – one reason you are starting to see stories of pension fund underfunding all across Europe and North America.

• BBC News – Today – ‘A third of large companies can’t afford to fund pension deficits’
• Pension Gaps Loom Larger – WSJ.com

Investors are likely to take greater risk and reach for yield in order to get the returns they need to prevent under-funding. This risks a bad outcome as we have already witnessed during the credit crisis. This is exactly why many are begging government to turn on the money taps. A lot of people – not just debtors – would enjoy a lot more of "l’***lation" of which Dati speaks.

If I’m not mistaken though, the word should be inflation.

Related articles:

• Rachida Dati – Wikipedia
• Sarkozy Stays Loyal to Increasingly Divisive Minister – Spiegel