An option for Greece

There is a succinct piece on explaining that Greece has 5, not 2 options before it. I want to put forward a sixth.

Before I do that, a summary of the other 5:

1. Greece stays in the Eurozone

2. Greece keeps the euro, but stays outside the eurozone – “The Montenegro Option”

3. A Currency Board – a new currency, but locked to the Euro.

4. A Dual system – a Drachma and the Euro circulates side by side

5. The New Drachma – possibly growing out of option 4, above, due to Gresham’s Law.

Option 6 – Currency Freedom

This is to end currency monopoly formally, not just to a dual currency arrangement, but a true acknowledgement of plurality, as decided upon by each member of the Greek citizenry.

US dollars, euros, RMB, gold, Bitcoin, anything, if agreed by both parties in the transaction.

It would be likely, IMHO, for the Greek govt to have its own currency again, free from external control by states or private sector banks, but this time it would be without a monopoly. The government can, of course, require payment of taxes in its own currency, and decide to pay suppliers and employees in it, too. This would add some heft to it.

What this will do, however, is not grant it as much power to print at the expense of savers, creditors and wage earners. It will impose much needed discipline and awareness of consequences. The government would need to become more like a going concern, able to raise funds for investment purposes that yield return, but the Government would find it hard to borrow on the never-never for ongoing overheads and obligations. A Drachma will be, more than most currencies, a share certificate in The Greek State Inc. And for those who think one cannot borrow/lend shares, well, one can, and many do already.

The role of the central bank would not go away, but be limited to institutions handling Drachma, as mentioned. Most banking organisations are operating under global agreements such as Basel3, anyway, and if taxes are paid in Drachma,

most banks will need to handle it one way or another and thus have a state license and deposits lodged at the Central Bank.

The freedom in currency will mean an organisation that has costs in us dollars can bill in us dollars. It means routinely,

savers need not keep their wealth hostage to one currency or politicians. Banking solutions can and would be found to handle the exchanges efficiently. It is not beyond the wit of banks to perform immediate, low margin, zero commission foreign exchange via multiple accounts in different currencies. In Hong Kong, my moderate transfers had a 0.3% spread 15 years ago. Multi currency credit or debit cards, or other payment solutions such as gold linked or bitcoin based, that detect the destination currency, would deduct the appropriate account or perform the necessary conversions.

With the 6th Option, people will be free of currency slavery. Even if they did continue to use the domestic State currency, it would be more exposed to reality, and thus give the State a moment of pause before they acted. Life could continue if a person chose to back out of its use partly or completely.

The state is, however, faced with a society that has, for all intents and purposes, pulled out on the implicit, if grudging, compact that sustains taxation. Taxation has to be seen to be fair not just by the majority, but also by those shouldering the burden. Flat? Land ? Consumption? A mix of all three? It is a problem that faces the nation, no matter what option was chosen.

 

 

Image © Alehins

Video: Why Britain needs the euro

This talk proved to be seriously contoversial online, before a word of it was uttered. Some people chose to stay away, others came but for different reasons, but thankfully most entered into the spirit of the thing. But what was the point of talking about the euro?

The intention of choosing this topic was not to say to the world: here is a bona fides libertarian and this is what bona fides libertarians think, but rather to explore an issue from a new and unexpected direction. Christian Michel is not the first person to suggest the euro, symbol of the European project and lever for the aquisituion of sovereignty, might not be a bad thing if considered on it’s own merits. The arguement goes, approximately, that an ideal currency should have wide circulation, have backing at the appropriate economic scale, and money printing should be limited to ensure price stability. Michel argued that the euro has wide circulation and is intended for wider circulation, that it is big enough and that the ECB’s mandate is to ensure price stability.

Looking at the reasons why the euro might be a good idea, helps us by reheasing the arguments about what it is we want from a currency and what the economics are.  The issue is, of course, immensely important but a well informed and prepared community of activists is a prerequisite for tackling any issue at all.

All that said, and without wishing to undermine it, isn’t a debate with people you disagree with so much more enjoyable than one where everyone agrees already? Regardless, here is the talk, as is, and much of the Q&A as well. The filming of the Q&A was impacted by a few technical glitches and the the video quality is even patchier than I expected. I hope you don’t mind.

A word about the introduction, which is probably a bit muddled. Sometimes a writer is hostile toward a topic but writes it up anyway and ends up paying the subject a compliment. Gordon Gecko’s greed speech in Wall Street is an example where good sense is placed into the mouth of a villain by a writer that disagrees politically. In the week ahead of the talk the libertarian rock god Frank Turner was accused of the heinous crime of being a libertarian and saying libertarian things and the Guardian printed a list of shocking quotes that sounded perfectly decent to me*. Likewise the profile of Christian Michel, which I borrowed from a book on money laundering, was perhaps from a hostile source (I haven’t read the whole book), but when taken literally it was most complimentary, and it was my intention to be complimentary. I hope that is a little clearer.

 

* remind me to spend a lot more money on Frank Turner merchanise…