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Currency devaluation is usually preferred to inflation - that's why exiting the Euro is under consideration, so that there is a local currency to devalue. High
by _rpd 11y ago
Currency devaluation is usually preferred to inflation - that's why exiting the Euro is under consideration, so that there is a local currency to devalue. High inflation erodes savings and discourages investment - it can be socially destabilizing.
- vessenes 11y agoYes, you said it better. I was imagining devaluation. The interviews with Varoufakis are interesting this week; they indicate he had a "don't leave eurozone, but get leverage" plan which involved nationalizing banks and issuing their own 'ious', presumably senior in some ways to their existing debt. Seems like the administration didn't have the stomach for it. I don't think this ends well for Greece, frankly. This kind of authoritarian punishment is what drove Germany into WWII at some level; crushing debt and 'punishing' as a thing you do to countries just isn't a great plan.
- _rpd 11y agoI think the plan is to sacrifice Greece to keep Portugal, Spain and Italy in line. If Spain or Italy starts demanding debt forgiveness, the Euro really will collapse.