Good news, everyone. According to an email which was erroneously misplaced into my junk folder, my “€11.8M EUR” has been found by none other than “Her Excellency Christine Lagarde,” the “EU Treasury Director”.

That is what I can gleam from the subject line and sender of the email, at least. I’m not game to open the email, even for the benefit of making this edition of Fortune & Freedom a little more ridiculous than it already is.

Let’s start with some context…

I don’t think Christine Lagarde would be emailing me much of anything given how often I’ve pointed out her criminal record, which she achieved while she was French finance minister.

The crime of financial negligence didn’t cost her the job of International Monetary Fund (IMF) chief at the time, though. But as if that wasn’t ironic enough, consider what happened next.

As she said about the ruling that convicted her, “there’s a point in time when one has to just stop, turn the page, and move on,” which she did, to become head of the European Central Bank (ECB) next.

Now, given what the ECB has done since, I’m not surprised she got head hunted for her credentials of being “convicted for financial negligence without getting arrested”.

But here’s the most interesting part of all this. The scammers chose to reassign her a new job title altogether. As if she hasn’t had enough relevant ones when it comes to dishing out €11 million indiscriminately.

The scammers chose a rather prescient title. They called her the “EU Treasury Director”.

Now, this job does not exist… yet.

In fact, perhaps the scam email is actually a message from the euro area’s inflationary future. That will be a  time when the United States of Europe government dishes out million-euro cheques to its citizens, a bit like the US government dished out thousands recently. In real life, I keep getting surprise cheques almost as large from the Japanese government, for some reason…

So, perhaps this scammer is actually warning me of what’s to come for the euro area. A bout of epic inflation ensues as cash is thrown around like confetti by a European nation state.

You see, for now, the EU is a confederacy of sorts. It doesn’t have a treasury because it isn’t the federal government of a United States of Europe. It has assigned powers instead, with the promise of co-operation from national governments. But it is those governments who dish out the cash, in the end.

But if that changes and the EU becomes more of a nation state, with its own treasury, the constraints may shift. And, no doubt, Christine Lagarde would be an ideal candidate given she’s held just about all possible related roles except being head of the EU itself.

The revolving door between national governments, organisations like the IMF and central banks like the ECB is getting a little absurd over in Italy too. Mario Draghi may manage to hold as many offices as Christine Lagarde, with the former ECB president and current Italian prime minister now setting his sights on Italy’s presidency. In the United States, former Fed chair Yellen is now at the Treasury. And so on and so forth – it’s an old tale, but an increasingly blatant one.

It also reveals how central banks and governments are becoming increasingly tangled up in each other’s business. That may not matter much, if you don’t pay attention to history. But that’s a different story.

Another interesting angle the scammer no doubt intended in his email to me was the timing. The ECB is falling behind its peers when it comes to tightening monetary policy.

The recent stock market selloff came on the back of fears the US Federal Reserve would tighten too much, too fast. The Bank of England surprised the market with its puny interest rate hike. And other central banks are on the move too.

But, over at the ECB, it’s business as usual.

Germany’s Bild tabloid recently had the headline “Act, Mrs Lagarde”. The commentary goes on to point out that the authorities have been suspiciously quiet about the inflation crisis, even though citizens are suffering month after month. The paper targets Christine Lagarde for claiming the inflation is not worth even discussing while the US authorities do just that. “This must stop” and “inflation hits the poorest hardest” are two key quotes.

Producer price inflation reached 24% in Germany not long after the article…

But Christine Lagarde is sticking to her guns, claiming inflation will moderate and that Europe is different to the UK and United States. With no tightening in sight, the euro is sliding in foreign exchange markets.

The big problem, though, is that inflation within the euro area is diverging. But Lagarde only gets to set one monetary policy for them all. As Tolkien would have put it…

One monetary policy to rule them all,
One exchange rate to confine them,
One central bank to bring them all,
And in the euro bind them.

This makes the position of EU Treasury Director look a little tenuous. If the euro area can’t handle one exchange rate and monetary policy, do you think it could handle one fiscal policy? Imagine getting the Germans and Greeks to agree on a welfare state…

Another challenge is that the ECB could lose control of bond markets. Interest rates are already surging there, even if the central bank isn’t behind the move. Lenders to governments aren’t willing to lose money hand over fist, or at least not as fast as they have been recently, with negative interest rates on bonds combined with inflation at 5%.

It’s no wonder that central bankers are swapping their positions for fiscal affairs. That’s where the policy crisis now lies.

Nick Hubble
Editor, Fortune & Freedom