Greece still has a choice | George Irvin | Comment is free | The Guardian .
My friend and writing colleague George Irvin makes a simple but highly effective point. Greece still has a choice. It could abandon the euro and default on the bulk of its debt. After all, it worked for Argentina when it defaulted in 2001-02.
What is more it would nip contagion in the bud.
In which case this might be what is necessary.
Because let's be candid - we can't destroy societies for the sake of wrongly priced money. But that is what we're being asked to do. Greece is the obvious example, but the same is true here in the UK. For the sake of containing inflation, which is the necessary and eventually only possible mechanism that will sweep the toxic debt out of our current economy by devaluing it out of existnce, and in the process priovide an essentuial shift in the distribution of wealth towards the young, we are instead going to destroy our public services and make our young slaves to unrepayable debt for their education, houses and future.
There is no sense in being enslaved by money. So George is right: radical action may be needed.
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I actually have relatives in Greece from my maternal side. My uncle has a fixed pension. His wife, a teacher, has had her salary cut by 30%. Surely you can see that your proposed inflation solution means for them? He will pay the ‘inflation tax’.
My cousin runs an electrical wholesale company. Greece’s labour laws means that he cannot reduce his payroll costs at all. And he can’t fire anybody – on no. He is close to the edge, and his only option is to throw in the towel: he simply does not have the resources necessary to continue. Surely you can see that inflation will kill him? He will pay the inflation tax.
I just cannot see how printing more money-tokens for the same amount of economic wealth can help anybody but the bankers and connected plutocrats that rule the roost in Greece. Bankers love inflation. They get to play with the newly minted money first. The big financiers are next up – they get to use it first, pushing up prices. Poor pensioners and those on low salaries are always the last to receive the new money, and they will find all of their costs will have risen before they ever get any of it.
Inflation is a cudgel that hammers the needy and rewards the bankers and those plutocrats connected to government through the umbilical cord of coruption.
Not fair Mr Murphy.
@James Tyler
Nothing is fair in this situation
It’s the least bad that matters
The sooner Greece defaults the better. All that is being set at present is a precedent that Portugal and Spain will want to follow.
How is robbing pensioners to bail out bankers fair? Why (inflation) tax on the weakest in society?
@James Tyler
I’m afraid you’ve got the wrong end of the stick about inflation. First, let me make it clear that we’re taking about 1950-60s style inflation (which averaged about 3.5% pa in the OECD countries over 25 years). The main gainers from mild inflation are households (most of whom are net debtors, largely because of mortgages). The main losers are banks (because the value of their assets is eroded). That is why bankers are so keen on ‘sound money’ and ‘inflation targeting’. There’s nothing wrong with low inflation, nor mith monetising debt in today’s climate of near zero inflation.