Last week it appeared that a bailout deal between Greece and the rest of the EU was going to go through. However, it seems that the prime minister of Greece is going to quite literally, “let the people decide“. Now, the Greek people must decide if they want to vote for the bailout – which requires them to raise taxes and cut government services, or against the bailout which would cause them to default on their loans. If the default on their loans, they won’t be able to deficit spend Euros anymore and will have to, in response… raise taxes and cut government services. That is quite a dilemma for Greek Citizens.
If I were a Greek Citizen, I would vote ‘No’. The reason is that there are other options. If the Greek government cared more about their citizens then about foreign and domestic bankers, they would research those alternatives. Those alternatives would give Greeks what they seem to want. A more leisurely lifestyle – even if it’s ‘poorer’. There is nothing wrong with wanting that and no reason they can’t have it.
One of the alternatives is the so-called Mosler bond.
turn the bonds it buys into Mosler bonds, by requiring the govt of issue to legally state that in the case of non payment, the bearer on demand can use those bonds for payment of taxes to the govt of issue.
That would allow Greece to continue borrowing and spending on demand and at will.
Another alternatives is one that, for some reason, seems to be way outside the policy discussion. Greece could just drop out of the EU, and convert all debts back to a Sovereign currency like their original drachma. Once they’re monetarily sovereign they will never again have to worry about government default. They will be like most of the world in that the only limit on spending will be inflation. If Greeks want a leisurely lifestyle and don’t mind having a week currency, they could go back to full employment for those who want employment.
Unfortunately, neither of these options seem to be seriously discussed even though it would give Greek citizens what they desire. That is why I would vote no against this deal. Vote it down, and force the government to seek alternatives.
Some, like Warren Mosler himself, would encourage Greece to vote yes. His reasoning is very logical. If you vote for the bailout, you can continue borrowing and only have to accept some cuts and small tax rise. If the vote is no and you default and cannot continue borrowing, then you will have to cut even more spending and raise taxes even more.
In the end, it comes down to politics. Mosler’s position is very pragmatic. Vote for the bailout because it’s not as bad as default. My position is very political. Vote it down and force the Greek government to find an alternative solution.
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