peterchan75 (29-Mar-2012) wrote: Thread topic: Dear Mr Bernanke: Justice rather than diluting currency is the solution unemployment in any economy.
Greece, Portugal, Ireland and Spain all have one thing in common, inability to print money. If these PIGS can print, print too much = Zimbabwe, and they would keep thier spending in check. Now, they just spend too much and expect others to pay for it. One of these PIGS has a unique programme that allow unmarried children to claim parents' pension. How nice ?
Now you know why the Brits still cling on to the Sterling ? They have the option print if they want to.
Me understands that the reason for the problem with the Euro is that the PIGS nations, represented by your description of countries had egregiously found loopholes or oversight within the Euro common currency agreement: such that whilst they each couldn't unilaterally increase their monetary supply by printing $$$, they discovered that they could each issue national bonds (government debt) to raise $$$ from investors- only to reveal later that they couldn't raise the euros necessary to repay their debt or even service the interest repayments till term; thus the need for Greece to reduce both coupon rate as well as face value of its outstanding debt- these resulting in debt holders as I understand recently having to accept an at least 50% loss on their investments.
Regarding what you just said about "that allow unmarried children to claim parents' pension.", I wouldn't bet too much on that being the case fr long moving fwd given such a bad repute (govt debt reduction 50%- as a/m), nobody will ever, and for quite some time, agree to buy Greek government bonds and so shutting the tap to the Greek govt's access to funds. Without the funding, these pension schemes will have to be suddenly cut: thus the daily street protest and political instability in Greece.
Your sentence "If these PIGS can print, print too much = Zimbabwe, and they would keep thier spending in check." however does not make immediate economic sense since it was simply because the government of Zimbabwe did not keep its spending in check, that like Greece, ended up borrowing funds from the investment market. Unable to repay the debt at term, the Zimbabwe govt resorted to just printing Zimbabwean dollars to repay this debt resulting in the sudden increase in Zimbabwean dollars for sale as nobody wanted to hold the currency of a corrupt country; massive hyperinflation in Zimbabwe ensued. The only logic that I can read in your sentence is that in the case of Zimbabwe, after the state of hyperinflation involving the Zimbabwean dollar totally destroyed all faith in the currency, Zimbabwe adopted the use of other world currencies namely the USD and the S.African Rand for use locally: and in this way, being unable to print these foreign currencies, they would by default "keep thier spending in check."- correct but you have jumped many steps.
Regarding "Brits still cling on to the Sterling", the benefit of such is that like the Americans, the UK can print as much $$$ as it wants, but so can Singapore, Indonesia, or any other sovereign state for that matter; what thus matters is the people's faith in your government. The Zimbabwean government showed itself to be absolutely corrupt if not totally irresponsible in its management of the country's currency/ economy- and now, Zimbabwe is without its own currency and also happens to lie at the bottom of the pit in-terms of GDP per capita. According to 'List of countries by GDP (nominal) per capita' [wiki]: Singapore is ranked (ballpark) approx 15th in 190 countries at USD45,000 p.a. whilst that of Zimbabwe, ranked approx 163 is approx USD650 p.a. Perhaps monetary policy is just like a car: some are better made than others but everyone, if ill maintained, can only result in severe dysfunction or even a nasty traffic accident.
G'day to you.
B.C.
PS:
Hyperinflation in Zimbabwe:
This poor guy’s going to do the week’s shopping at the supermarket. All that cash is worth less than $100 USD. A few months later inflation has driven up the price of this dinner for one to a shade over 1.2 billion Zimbabwe dollars. Before tip![Source: 'Hyperinflation: What It Looks Like']
Sign in a Zimbabwean public toilet [Source: 'Zimbabwe Collapse']
Want a new T shirt? Too bad you waited a few weeks…it’ll cost you 3 billion Zimbabwe dollars after tax![Source]==========
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30Mar2012: Dear Mr Bernanke: Justice rather than diluting currency is the solution unemployment in any economy.
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