Mitchell’s laws: The more budgets are cut and taxes inceased, the weaker an economy becomes. To survive long term, a monetarily non-sovereign government must have a positive balance of payments. Austerity = poverty and leads to civil disorder. Those, who do not understand the differences between Monetary Sovereignty and monetary non-sovereignty, do not understand economics.
My family has a saying: “Good comes from bad.” Certainly, Greece’s suffering has been awful. But perhaps some good can come from it. Perhaps the world at last will understand the folly of restricted government spending and the need for Monetary Sovereignty.
(U.S. Tea Party, are you listening?)
BBC News, Europe
EU central bankers ponder Greece euro exit
European central bankers have been openly expressing views on the possibility of Greece leaving the eurozone as its leaders struggle to form a government.
Germany’s top banker said it was up to the Greeks to decide, but if they did not keep to their bailout commitments, they would receive no new aid.
This is the best thing that could happen to Greece: Leave the euro and don’t accept any more “aid” (i.e additional indebtedness, unemployment, poverty and austerity).
After last week’s elections in France and Greece, two things began to change in the eurozone. First was the talk that “spending” could replace “austerity” as a way out of the crisis. That’s perhaps more aspirational than practical but it pleased the voters.
This is news??? The voters are smarter than their leaders. Government spending is the only way out of a recession or depression. Reduced government spending (ala the U.S. Tea Party foolishness) always has the same consequences: Worse recession and deeper depression.
Second was the growing confidence amongst eurozone ministers that Greece could – and maybe should – quit the euro. Some speculate it’s a PR exercise to manage expectations – slowly re-introducing the notion that the 17 Euro nations could soon be 16. Others suggest it’s a long overdue move, that would have eased the problems much sooner.
I said this more than six years ago.
If the country simply quits the euro and resurrects the drachma, while still trying to pay off its debts, an inevitable slump in the value of the drachma would make those debts even more unaffordable.
Absolutely false. First, there is no evidence, one way or another, that the drachma would be valued less than the euro. I personally would rather lend to a “drachma Greece” than to a “euro Greece.” More assurance of being paid.
Second, even with inflation, a Monetarily Sovereign nation (which Greece then would be) can pay any debt of any size, any time. No debt is “unaffordable.” Using the word “unaffordable” demonstrates ignorance of the difference between Monetary Sovereignty and monetary non-sovereignty.
Greek voters punished mainstream parties which backed the bailout at last Sunday’s parliamentary election.
As well they should have. Only the EU would call additional lending to a nation that already is unable to pay its debts, a “bailout.” The U.S. banks did exactly the same thing, which led to the Great Recession.
Visualize the Mafia extending additional credit to a guy who already can’t pay what he owes them. Is that a “bailout”?
Syriza – a leftist, anti-bailout party – firmly rejects the terms of the most recent EU-IMF bailout, which requires tough austerity measures in return for loans worth 130bn euros.
They reject additional, unaffordable debt and more austerity. As the kids say, “Well, DUH!
On Saturday, German central bank chief Jens Weidmann said: “If Athens doesn’t keep its word, it will be a democratic choice. The consequence will be that the basis for fresh aid will disappear.”
Translation: The basis for deeper Greek austerity will disappear, and all of us “1%ers” who foisted the euro on an innocent public, will look like total idiots, and possibly lose our jobs. Hey, are they building a guillotine outside my window?
“We’re a breath away from the drachma and disaster,” liberal Greek daily Kathimerini warned on Saturday.
Translation: We’re a breath away from fiscal freedom.
Within two years after Greece leaves the euro, and re-adopts the drachma, its economy will grow, while the other euro nations sink deeper and deeper into austerity.
Rodger Malcolm Mitchell
No nation can tax itself into prosperity, nor grow without money growth. Monetary Sovereignty: Cutting federal deficits to grow the economy is like applying leeches to cure anemia. Two key equations in economics:
Federal Deficits – Net Imports = Net Private Savings
Gross Domestic Product = Federal Spending + Private Investment and Consumption + Net exports