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Nobody wants BSF. Plus the government does shenanigans with the exchange rate, with the official exchange rate having no relationship to reality. If you refloa

Nobody wants BSF. Plus the government does shenanigans with the exchange rate, with the official exchange rate having no relationship to reality. If you refloat debt in a different valueless currency that you control the exchange rate on, you're de facto defaulting - nobody wants your currency. They want hard currency. Re: currency you don't control, do you consider Ecuador a colony? They have debt in the sucre, which is pegged to the dollar. Is most of Europe a colony of Brussels? Except for the British and the Swiss, everybody else runs debt in Euros, which they don't control.

njarboe 9y ago
You should ask some Greeks if they feel they are in a colony like position with respect to Brussels/Germany. Controlling your own money is a key factor to maintaining sovereignty. Goldbugs take this to a level where they desire personal sovereignty and thus a money not controlled by the government (gold or silver).
- wwosik 9y ago
  It's seldom for a debtor in need to choose the currency. If Greece kept drachma, they'd still need to borrow in euro or dollar as few would have drachmas to loan. US can take loan in dollars because everyone has dollars to park, which is because everyone else has dollars too.
  - njarboe 9y ago
    In any country with a free exchange of currency there is no problem for investors to get any amount of currency they want. They buy it on the open market. Forex is the biggest and most liquid market in the world. Before the Euro every country in Europe had bonds in their own currency. Interest rates were higher in some due to inflation and default risk, but there was no problem borrowing large sums of money.
- jimmywanger 9y ago
  Well, the Greeks had a grand old time borrowing against the Euro when people were still willing to lend to them. When the piper came due, they couldn't raise interest rates or devalue their own currency to deal with the situation. Point is, it's not a colony situation. For a while, Greeks loved the fact they could borrow against the EU with low interest rates, much lower than their own financial situation would indicate. Once people started wanting their money back, yes, this limited their options. They probably shouldn't have put their own economy into that situation though, that's why the drachma used to fluctuate up and down so much and the interest rate was high, because they weren't really good for the money they borrowed.
RobertoG 9y ago
"currency you don't control, do you consider Ecuador a colony? They have debt in the sucre, which is pegged to the dollar. Is most of Europe a colony of Brussels?" You can make a powerful case that they are. A country that doesn't control its money doesn't control its economic policy. Is there anything more important than the economy for a country? A fair economic area need, first, a monetary and fiscal common policy, and, second, a policy choose in the interest of all the citizens in the area. The Euroarea only have a monetary common policy and I'm not the only one that think that is not run in the interest of all the Europeans. I can't talk about Ecuador, but historically, fixed exchange rates, as any fixed structure don't survive even small "earthquakes". It's even worse if it's not an fixed exchange rate, but a foreign currency. In the case of Ecuador, you can be sure that, at some point in the future, the economic policy run from Washington will be the opposite of what the country needs.
- jimmywanger 9y ago
  I think you're over simplifying a bit. > A country that doesn't control its money doesn't control its economic policy. Is there anything more important than the economy for a country? http://www.coha.org/examining-the-effects-of-dollarization-on-ecuador/ http://www.coha.org/examining-the-effects-of-dollarization-o... The point of the article is that the economy of Ecuador was so bad dollarization caused capital flight to stop, stabilizing the economy. I'm not an economist, but maybe the short term benefits outweighed the long term restrictions. But it did impose some amount of financial discipline on them that they never exhibited before, and would probably boost the confidence of foreign investors that they could invest and still get money out. As a counterpoint, Venezuela is not a colony, but their economy is in a shambles, they can't feed their own citizens, but they have ultimate monetary control and can do whatever they want to their economy. That's what got them in this mess in the first place. Some thing as PRK and Cuba.

njarboe 9y ago

You should ask some Greeks if they feel they are in a colony like position with respect to Brussels/Germany. Controlling your own money is a key factor to maintaining sovereignty. Goldbugs take this to a level where they desire personal sovereignty and thus a money not controlled by the government (gold or silver).

wwosik 9y ago
It's seldom for a debtor in need to choose the currency. If Greece kept drachma, they'd still need to borrow in euro or dollar as few would have drachmas to loan. US can take loan in dollars because everyone has dollars to park, which is because everyone else has dollars too.
- njarboe 9y ago
  In any country with a free exchange of currency there is no problem for investors to get any amount of currency they want. They buy it on the open market. Forex is the biggest and most liquid market in the world. Before the Euro every country in Europe had bonds in their own currency. Interest rates were higher in some due to inflation and default risk, but there was no problem borrowing large sums of money.
jimmywanger 9y ago
Well, the Greeks had a grand old time borrowing against the Euro when people were still willing to lend to them. When the piper came due, they couldn't raise interest rates or devalue their own currency to deal with the situation. Point is, it's not a colony situation. For a while, Greeks loved the fact they could borrow against the EU with low interest rates, much lower than their own financial situation would indicate. Once people started wanting their money back, yes, this limited their options. They probably shouldn't have put their own economy into that situation though, that's why the drachma used to fluctuate up and down so much and the interest rate was high, because they weren't really good for the money they borrowed.

RobertoG 9y ago

"currency you don't control, do you consider Ecuador a colony? They have debt in the sucre, which is pegged to the dollar. Is most of Europe a colony of Brussels?" You can make a powerful case that they are. A country that doesn't control its money doesn't control its economic policy. Is there anything more important than the economy for a country? A fair economic area need, first, a monetary and fiscal common policy, and, second, a policy choose in the interest of all the citizens in the area. The Euroarea only have a monetary common policy and I'm not the only one that think that is not run in the interest of all the Europeans. I can't talk about Ecuador, but historically, fixed exchange rates, as any fixed structure don't survive even small "earthquakes". It's even worse if it's not an fixed exchange rate, but a foreign currency. In the case of Ecuador, you can be sure that, at some point in the future, the economic policy run from Washington will be the opposite of what the country needs.

jimmywanger 9y ago
I think you're over simplifying a bit. > A country that doesn't control its money doesn't control its economic policy. Is there anything more important than the economy for a country? http://www.coha.org/examining-the-effects-of-dollarization-on-ecuador/ http://www.coha.org/examining-the-effects-of-dollarization-o... The point of the article is that the economy of Ecuador was so bad dollarization caused capital flight to stop, stabilizing the economy. I'm not an economist, but maybe the short term benefits outweighed the long term restrictions. But it did impose some amount of financial discipline on them that they never exhibited before, and would probably boost the confidence of foreign investors that they could invest and still get money out. As a counterpoint, Venezuela is not a colony, but their economy is in a shambles, they can't feed their own citizens, but they have ultimate monetary control and can do whatever they want to their economy. That's what got them in this mess in the first place. Some thing as PRK and Cuba.