There is Only One Way Out For Greece

Brussels has been dead wrong. This stupid idea that the Euro will bring stability and peace as it was sold from the outset, has migrated to European domination as if this were a game of Thrones. Those in power have misread history almost at every possible level. The assumption that the DMark’s strength was a good thing and this would be transferred to the Euro, has failed because they failed to comprehend the backdrop to the DMark.

Germany moved opposite of the USA and moved toward extreme austerity and conservative economics because of its experience with hyperinflation. The USA moved toward stimulation because of the austerity policies which created the Great Depression and led to such a shortage of money many cities had to issue their own currency just to function. The federal government thought, like Brussels today, that they had to sure up the confidence in the bond market and that called for raising taxes and cutting spending at the expense of the people. The same thinking process has played out numerous times throughout history. Our problem is, nobody ever asks – Hey, did someone try this before? Did it work? This is why history repeats – we do ZERO research when it comes to economics. It is all hype and self-interest.

Greece should immediately begin to print drachma. By no means has the introduction of a new currency been a walk in the park. There is always a learning curve as in the case of East Germany’s adoption of the Deutsche mark, the Czech-Slovak divorce of 1993, and the creation of the euro itself . However, the bulk of transactions today are electronic. That means we are dealing with an accounting issue more than anything.

The difference concerning East Germany and others was the fact that there was no history. This is more akin to the 1933 devaluation of the dollar by FDR whereby an executive order reneged on promises to pay prior debt in gold. This would be similar. The new drachma should be issued at two-per Euro only because people will thing the drachma should be worth less. If it were issued at par, the speculators will sell it assuming it will decline. Issue it and 50% and you will eventually see the opposite trend emerge once people see the contagion begin to spread.

Brussels already cut off the banks in Greece. All accounts in Greece should be electronically switched to drachmas. Begin to issue printed drachma for small change. The umbilical cord to Brussels must be cut immediately for Greece to stand on its own. You cannot negotiate with people who will not change their view of the world for their own self-interest will cloud their perspective.

All debt should be suspended. Any future resolution of debt should be reduced by 50% to account for the overvaluation of prior debt thanks to the Euro, and any interest previously paid should be deducted from the total loan.

All income tax should be abolished and the only taxation should be indirect. A close examination of the cost of government should be carried out and as many aspects of government should be privatized and put out for bid. For example, motor vehicle agencies and police can be privatized eliminating pensions to be paid by the government. The size of government must be addressed or Greece will risk civil war between government workers and private citizens.

Eliminating the income tax is critical for that is desperately needed to create jobs. Small business must be profitable to start to create jobs and those who had to leave will return, who are the nation’s smartest. Bring your best talent home and build  an economy.

Eliminating the debt is critical. Some 20 nations forgave all debt for Germany after World War II in 1953 in the London Agreement on German External Debts, also known as the London Debt Agreement, which was a debt relief treaty between the Federal Republic of Germany and its creditor nations concluded August 8, 1953.

The London Debt Agreement covered a number of different types of German debt both public and private from before and after the World War II. Some of them arose directly out of the efforts to finance the reparations system, while others reflect extensive lending, mostly by U.S. investors to German firms and governments. Those included forgiving German debt were Belgium, Canada, Denmark, France, Great Britain, Greece, Iran, Ireland, Italy, Liechtenstein, Luxembourg, Norway, Pakistan, Spain, Sweden, Switzerland, South Africa, the United States, Yugoslavia and still others.The total amount under negotiation was 16 billion marks of debt resulting from the Treaty of Versailles after World War I which had not been paid in the 1930s, but which Germany decided to repay to restore its reputation. This money was owed to government and private banks in the U.S., France and Britain. Another 16 billion marks represented postwar loans by the U.S. Under the London Debts Agreement of 1953, the repayable amount was reduced by 50% to about 15 billion marks and stretched out over 30 years, and compared to the fast-growing German economy were of minor impact.

Therefore, what enabled Germany to rise from the ashes is a successful model. Greece too must be debt free. End federal borrowing, suspend all debt, and accept no more bailouts from Brussels.