2 2 mins 9 yrs


Remarkable story here which demonstrates simultaneously the desperation and guile that drives the EU.

“A decade after it gave up the drachma, the world’s oldest existing currency, Greece faced the crushing reality that it did not have the sovereign authority to meet the demand for paper currency from its own citizens. It could mint euro coins and there were also plates for the €10 note. But coins and small denomination paper were not going to satisfy the demand.

Only the German Bundesbank, the National Bank of Austria and the Luxembourgers have ever had the plates for the highly prized €500 note, the highest-value paper currency in the world. (This form of manufacturing would appear to have been confined to German-speaking countries. Mmmmm…) Intentionally or not, the ability of Greece to meet a huge surge in demand for banknotes had been effectively proscribed.

By June 2012, Greek demand for paper currency had nearly trebled and amid last summer’s electoral tumult, the secret missions started in 2011 were once again required. The response was extraordinary. While issuing public threats to Greeks, in private the Troika authorised military and commercial cargo planes to feed them euros – billions-worth on every flight. They were intended not only to preserve Greece’s fracturing social stability, but also to preserve the single currency itself”

What madness! And what utter humiliation for the Greeks, not that they see to have any shame left. Greece remains in the debt mire and it has been indicated it needs a THIRD  billion euro bailout, so stuffing euros into aircraft and surreptitiously flying them to Athens only deferred the day of reckoning. As Ian Dury once sang – what a waste!

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  1. “Greece faced the crushing reality that it did not have the sovereign authority to meet the demand for paper currency from its own citizens.”

    State-central economic management is madness. How would the free market have handled this situation (in the almost impossible event of free markets finding themselves in this situation)?

    well it would have been a hard currency to begin with of course. A currency is just a commodity, with prices, like any other. So massive demand for it would have pushed up prices (i.e. interest rates). They would have gone up until people decide that it’s better to save and take advantage of the price rather than hoard currency. Savers would have flocked to the banks and reversed the currency shortfall. In short order, interest rates would fall as demand abates and currency becomes less scarce. This free markets balance supply and demand via the price mechanism.

    Instead, we have this madness of of billions of euros being flown across Europe to bail out socialist states. This is what governments cause and what governments do.

  2. It is so obvious that Greece (and others) cannot live with the currency of Germany and Austria without permanently high unemployment and misery. There will be a bust-up and it won’t be pretty.

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