I certainly agree that Greece should (at least partially) default on its Euro-denominated external debt; my proposal does not address that issue. My question remains: should not Greece consider issuing its own domestic currency as a means of reflating its domestic economy? Isn't it the case that it is not necessary to ban Euros from Greece in order to do so?
On Mon, Jul 18, 2011 at 12:30 PM, Jim Devine <[email protected]> wrote: > Robert Naiman wrote: >> As people contemplate a Greek exit from the Euro, some are saying: too >> logistically complicated, ATMs have to be replaced, etc. >> >> What about a dual-currency system? Many places in the U.S. did this >> during the Great Depression; Cuba did this during the special period. >> Instead of changing the ATMs, the Greek government could say: everyone >> who wants to hold Euros can still hold Euros; everyone who wants to >> accept Euros can still accept Euros. But the Greek government is going >> to start issuing "new drachmas"; instead of cutting government >> salaries and positions and pensions and public spending, it's going to >> pay a portion of these bills in "new drachmas"; the government will accept >> "new drachmas" for payment of taxes and other government services; >> businesses will be strongly encouraged, including through government >> leverage, (ie suppliers and contractors) to accept a portion of "new >> drachmas" as payment. This would allow the government to increase >> public spending and inflate. > > good idea, but Greece's external debts are still going to be stated in > US$ or euros. As the new drachma depreciates relative to those > currencies -- as it likely will -- those debts would be more valuable > in terms of new drachmas. Greece should default on those debts. > -- > Jim Devine / "Segui il tuo corso, e lascia dir le genti." (Go your own > way and let people talk.) -- Karl, paraphrasing Dante. > _______________________________________________ > pen-l mailing list > [email protected] > https://lists.csuchico.edu/mailman/listinfo/pen-l > -- Robert Naiman Policy Director Just Foreign Policy www.justforeignpolicy.org [email protected] _______________________________________________ pen-l mailing list [email protected] https://lists.csuchico.edu/mailman/listinfo/pen-l
