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When all else fails, print money This would have made a good Samizdata quote of the day, but as that slot has already been grabbed, here I give you this item about the end-times for the euro:
“For European politicians, the most important task now is to cover their tracks and blame others. Inflation is confusing. It also is an unfair tax on savers and a transfer of wealth to borrowers (assuming that interest rates can be held down or otherwise controlled, probably through nonmarket means). The ECB will now be under great pressure to take actions that create inflation. This may bring the end of the euro.”
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It appears the euro may never get a chance to see hyper-inflation as greece collpases and leaves the euro first. The Domino effect is very likely to become reality very soon as the whole house of cards collpases!
Indeed. And they’ll just carry on kicking the can down the slippery slope until the paper bubble hits the buffers.
Indeed. And they’ll just carry on kicking the can down the slippery slope until the paper bubble hits the buffers.
Posted by Brian Micklethwait at May 14, 2012 04:20 PM
And then, the expressions of shock, surprise and innocence…!
And then, the expressions of shock, surprise and innocence…!
It wouldn’t surprise me if France does … something arrogantly stupid… possibly even before Greece.
Am I wrong to foresee the possibility of evasions of the “legal Tender” rule within the EuroZone with respect to the use of the Euro for certain types of transactions?
Of course, the Swiss have already started to barricade the Sf against that use.
Will we see goods priced in (or will consumers be able to find goods priced in) other than the Euro, within the zone (or at least its peripherary)?
That surely occurs in contracts with Canada.
Is “the way out” to permit a multi-currency zone?
Somehow I doubt that, RRS, at least as an acknowledged official strategy. Not that I think that Gresham’s Law (in its original formulation) would be an impediment, as none of the available currencies is backed by anything tangible (i.e., there is no “good”money!), but some would be viewed as stronger than others so I still think the resulting exchange rate swings would be too disruptive (and too fearsome) for the eurocrats to contemplate.
Of course, it’s entirely possible (likely?) that an underground multi-currency system will evolve spontaneously. But what would be used? Pounds and dollars (US and Canadian) are the likely suspects, I suppose, since the Swiss have taken the franc off the table. None of those seem particularly attractive, though, and there probably isn’t enough float (except maybe for US$) to meet the need.
Absolutley not officially. Only by evasion.
It was 2d Para I was thinking. In fact, it might even start at official exchange rates. Hey, the Russians did it with 50’s.
Politicians don’t embrace inflation as an unfortunate last measure to save society. They aren’t pushed into inflation. Instead, they hunger for the conditions which allow them to print money and hand it to themselves and their friends.
They claim that inflation is a last chance to stimulate the economy and save the little man. In fact, it is a golden opportunity to stuff their pockets and immediately buy valuable assets before the price is pushed up further.
If they wanted to save the little man, they would make the bondholders pay by defaulting on the bonds. Instead, they pay off the bonds and let the cash savings of the little guy lose value.
Why else would hyperinflation exist and continue?
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Politico 1: We have inflated the currency 50% with all of our spending and investment schemes. Maybe we should stop now.
Politico 2: Things are going to collapse anyway, and the new money is still buying something, so why stop? We don’t want it to look like we were doing the wrong thing. We will say that we followed our policies to the end, but unfortunately nothing could save us.
Politico 1: Time to buy more P&G stock. Distribute another $20 million to the family business now, would you?
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