4 ms·

" dreams of reinventing the financial system based around a currency not issued by governments and not subject to the whims of central banks." Lets ask Greece

• genwin 13y ago
  Someone else having control of your currency is a lot different than no one having control over it.
  • hencq 13y ago
    It might be different, but it doesn't seem to matter much in practice. But fine, instead of comparing it to Greece, you could compare it to the gold standard. That didn't work so well either.
    • the_rosentotter 13y ago
      Somehow civilizations and empires flourished before modern financial instruments.
      • bayesianhorse 13y ago
        They actually didn't. Banks have been around for centuries and where instrumental in any economic growth beyond medieval farming methods...
        • icebraining 13y ago
          But "banks" aren't a currency. They may have issued their own currencies during the gold standard, but then again nothing prevents banks from issuing their own currency in an (absolutely hypothetical) bitcoin standard.
          • bayesianhorse 13y ago
            The gold standard had to be abandoned because it didn't work. For that matter, a new "Dollar Standard" is popping up, with all sorts of countries using the dollar as legal or quasi-legal tender...
            • oleganza 13y ago
              "Had to be abandoned"? Threat of 10 years in prison in 1933 does not sound like "people decided gold sucks". I guess, government had to take gold by force precisely because people trusted gold more than paper. http://en.wikipedia.org/wiki/File:Executive_Order_6102.jpg http://en.wikipedia.org/wiki/File:Executive_Order_6102.jpg
              • hencq 13y ago
                Isn't that exactly an argument why it had to be abandoned? The government couldn't increase the money supply, because dollars had to be backed by gold.
                • icebraining 13y ago
                  Well, some people disagree with the idea that the inability of the government to increase the money supply means the system doesn't work.
                  • hencq 13y ago
                    Fair enough, but I think most economists agree on the problems with a gold standard [1]. This is moving off-topic, but it's interesting that this seems to be one of many topics where there's a rare consensus between economists, but the general public holds a different opinion [2]. 1. http://www.igmchicago.org/igm-economic-experts-panel/poll-results?SurveyID=SV_cw1nNUYOXSAKwrq http://www.igmchicago.org/igm-economic-experts-panel/poll-re... 2. http://www.economist.com/news/finance-and-economics/21569378-if-economists-agree-something-public-will-almost-certainly-think http://www.economist.com/news/finance-and-economics/21569378...
  • swalsh 13y ago
    What i'm suggesting is that one solution to some of Greece's issues could have been solved through inflation. Arguably it would have been better received than the measures actually took. However without the control, their options have been pretty limited.
    • bayesianhorse 13y ago
      It's a simple solution. But it didn't work in the majority of cases. This solution would also require Greece to go back to the economics of a developing country because they can't afford most imports, especially medicine or electronics.
      • jljljl 13y ago
        It's not just about inflating away debt, it's also about being more competitive vs. other European nations, like Germany. A reasonable devaluing of the Greek currency would have allowed more jobs and opportunities to shift towards Greece, reducing unemployment and probably growing per capita GDP. Greece has other structural problems, but the inability to adjust their currency has definitely hurt them.
        • gamechangr 13y ago
          there is not a "one size fits all" economic plan.
          • jljljl 13y ago
            Of course there isn't. No one is saying there is.
        • bayesianhorse 13y ago
          You'd have to have a reasonable expectation that the additional competitiveness is worth the cost in living standards. There is no strong evidence that their own currency would help them enough to offset the problems they face after exiting the Euro.
• bayesianhorse 13y ago
  Actually the greek populace is overwhelmingly in favor of keeping the Euro and they don't really buy into "Make your own currency, devaluate it like crazy and maybe in a decade or to you will have the same wealth as now". In Argentina this didn't work that well either.
  • jljljl 13y ago
    Switching currencies and devaluing causes a lot of pain and hardship, especially since capital quickly flees the country to avoid the devaluation. This usually necessitates capital controls, and leads to a lot of short term chaos. Greece would likely prefer to avoid this pain, stay in the Euro, and escape the crisis through fiscal stimulus paid for by the EU, similar to how the US Federal Government provides fiscal stimulus and transfer payments to State Governments.