Doug Henwood writes: A return to the drachma or the creation of some sort of domestic parallel currency would create a class-tiered system, with elites still using the euro (even if parked abroad) and the masses stuck with a depreciating unit. What modest savings they have would be destroyed. This seems like political disaster aside from economic.
I'm no monetary economist, but it seems to me much that is written doesn't take into account the fact that the Euro will remain an ongoing currency after any Greek exit. Why change Euro savings accounts to drachmas? The rationale would be to prevent people from holding assets outside the national currency which would tend to weaken it. This is Veroufakis's fear in relation to any new drachma. It is already too late to stop this. Let the Euro continue to circulate. Instead of the drachma issue bonds in small Euro denominations redeemable in payment of tax. These would be somewhat less valuable than the Euro face value but would retain value better than a new drachma. They could be spent into the economy in the new employment programmes. They could be further solidified with the aggressive tax collection efforts which have been promised. They could be recognized as bank reserves by fiat. This along with strict capital controls could protect the banking system which should be nationalized in any case and could be done cheaply as bank values decline. Once the banking system is protected, an orderly default on much of the outstanding debt could be negotiated. The primary surplus can keep Greece out of the bond markets whose money is no longer much involved in any default in any case. Greeks who owe Euros overseas can be taken through liberal bankruptcy procedures. All this can be done without formally leaving the Euro thus fulfilling much of Syriza's radical agenda while remaining faithful to the Greek population's desire not to leave the Euro. As I said, I'm no monetary economist. What's wrong with this argument? Terry McDonough _______________________________________________ pen-l mailing list [email protected] https://lists.csuchico.edu/mailman/listinfo/pen-l
