An alternative Greek currency

Goldman Sachs

Goldman Sachs

The truth of the matter is, the very powerful Troika of creditors were not interested in coming to a sensible, honorable mutually beneficial agreement. — Yanis Varoufakis

The euro was flawed from the start, everyone knew this.

Yes, Greece should leave the euro, but difficult to create a new currency from scratch.

Not in the same position as Iceland or Argentina, both countries had own currencies, but otherwise similar.

Were Greece still on the drachma, they would not be where they are today.

But, they are too fixated on remaining in the euro and being members of Fourth Reich, even though neither is of advantage to them, quite the opposite.

This meant they had one arm tied behind their back when they entered into negotiations and were shafted. Had they called the bluff, defaulted, exited the euro, the euro would have collapsed and Germans would have been in the shit.

The role of a Central Bank is a lender of last resort. For the euro zone it is the European Central Bank. ECB turned off the money supply to Greece to force Greece to its knees. Once there was unconditional surrender, a choice between suicide or execution, ECB turned back on the money supply to Greek banks. The money that was lent, flowed back out to pay off international creditors, a  point Germans should note when they keep referring to bailing out Greece.

The Fourth Reich showed they would happily destroy a country if that country did not give in to its demands. They forced onto Greece, not only a surrender, but an unconditional surrender, part of which is rape and pillage of the country, enclosure of the commons, sell off of Greek assets on the cheap.  But at least we all now know what the Fourth Reich is capable of, Its brutality was exposed for all the world to see.  At least Podemos in Spain now know exactly what they are dealing with.

It was meant to set an example to Podemos, do not dare oppose the Fourth Reich this too will be your fate.

But it has had had the opposite effect, for pro-democracy activists across Europe to double their efforts to defeat the Fourth Reich.

What we have learnt, we have to work from the grass roots upwards. Syriza has grass roots support that most parties would die for, the NO vote showed that. But it was not enough. We have to restructure society from the bottom up.

Greece may have lost a battle, but not the war, the fight continues.

John Cassidy, writing in The New Yorker:

Syriza’s surrender wasn’t necessarily an ignominious one. As Lenin commented of the failed 1905 revolution in Russia, it was a retreat for a new attack, which ultimately proved successful. “I’m not going to sugarcoat this and pass it off as a success story,” Tsipras said to parliament on Wednesday, prior to the vote, acknowledging that the spending cuts and tax increases contained in the agreement would deal another blow to the Greek economy. However, that wasn’t the full story, Tsipras insisted. “We have left a heritage of dignity and democracy to Europe,” he said. “This fight will bear fruit.”

The euro zone is to benefit German industrial output.

The problem Greece has is many idle hands, work that needs doing, and no money to connect the two. What connects the two is money.

But money there is none, the banks are closed., or were, but even now open, restrictions on withdrawals.

Money has strange properties, it can move mountains, a feat usually the province of Gods.

Charles Eisenstein, Sacred Economics:

What we call recession, an earlier culture might have called “God abandoning the world.” Money is disappearing, and with it another property of spirit: the animating force of the human realm. At this writing, all over the world machines stand idle. Factories have ground to a halt; construction equipment sits derelict in the yard; parks and libraries are closing; and millions go homeless and hungry while housing units stand vacant and food rots in the warehouses. Yet all the human and material inputs to build the houses, distribute the food, and run the factories still exist. It is rather something immaterial, that animating spirit, which has fled. What has fled is money. That is the only thing missing, so insubstantial (in the form of electrons in computers) that it can hardly be said to exist at all, yet so powerful that without it, human productivity grinds to a halt.

On the individual level as well, we can see the demotivating effects of lack of money. Consider the stereotype of the unemployed man, nearly broke, slouched in front of the TV in his undershirt, drinking a beer, hardly able to rise from his chair. Money, it seems, animates people as well as machines. Without it we are dispirited.

In the Great Depression there was no money, in US banks were closed, because they were bust.

They created scrips, alternative currencies, across Europe and in the States. They were successful, incredibly successful. The reason they do not exist today is because they were too successful, the Central Banks closed them down.

In 1931, a German coal mine operator decided to open his closed mine by paying his workers in wara. It was backed by  coal.  Because it was backed by coal,  which everyone could use, local merchants and wholesalers were persuaded to accept it. The mining town flourished, and within the year at least a thousand stores across Germany were accepting wara, and banks began accepting wara-denominated deposits. Feeling threatened, the German government tried to have the wara declared illegal by the courts; when that failed, it simply banned it by emergency decree.

The following year, the depressed town of Wörgl, Austria, issued its own stamp scrip inspired by the success of the wara. The Wörgl currency was by all accounts a huge success. Roads were paved, bridges built, and back taxes were paid. The unemployment rate plummeted and the economy thrived, attracting the attention of nearby towns. Mayors and officials from all over the world began to visit Wörgl until, as in Germany, the central government abolished the Wörgl currency and the town slipped back into depression.

Another currency that emerged around this time was the Wir in Switzerland. The currency is issued by a cooperative bank and is backed only by the mutual agreement of its members to accept it for payment.

In the United States many “emergency currencies,” as they were called, were issued in the early 1930s. They appeared because the banks had gone bust.  Roosevelt banned all “emergency currencies” by executive decree when he launched the New Deal. The reason he did this was not because the local and state currencies wouldn’t be effective in ending the Depression, but because it would mean a loss of central government control.

The only alternative currency that still exist is the Wir in Switzerland. Alternative currencies did not vanish because they were not successful, on the contrary the were legislated out of existence because they were too successful, they challenged the power of the Central Bank, limited the ability of the Central Bank to control the amount of currency circulating in the economy.

Greece does not have the problem of the Central bank losing control, as it has no control.

This is the way forward in Greece, create alternative currencies.

There is no problem Central Bank not having control, as Greece has no control over the euro.

It was considered launching a new drachma, but the logistics were considered too great. But were they, if scrips were successfully issued during the Great Depression?  There would though have been a delay, and had Greece left the euro, the shock to the economy would have been too great.

But what of an alternative digital currency using smart phones?

It would have to meet the following criteria:

  • smartphone app
  • P2P
  • block chain
  • open source
  • secure
  • ease of use

The FairCoin wallet for Android would be a good starting point, as open source, it could be modified.

Each account could be loaded or pre-loaded with 1000 euro-equivalent (for small businesses 5000 euro-equivalent).

How to get the money into the account? It could be pre-loaded, or transferred by the Central Bank.

Uniqueness of each account, one account per person. Would need a unique ID. Maybe social security number or whatever Greeks use on passport or ID Card. Unique ID for local business? VAT registration number?

Need to create protocols, then implement as a smartphone app. This work already done if use or modify FairCoin wallet.

In the interim FairCoin could be used, download and install the FairCoin wallet. But where would the money come from, unless the Central Bank bought FairCoin, but where would the Central Bank acquire the money from?

Having Greek alternative digital currency, the Central Bank can create. Government and local government can pay in part in the alternative digital currency salaries.

Local currencies could be created, and according to Paul Mason, these already exist.

The European Central bank is proposing Quantitative Easing of one trillion euros.

We know from the UK, Quantitative Easing to be a failed policy, it has little impact on the real economy, the only impact is to transfer money to the rich and inflate the already obscene bonuses of bankers.

There could though be a role, were Quantitative Easing used to wipe out Greek debt, as recommneded by Ellen Brown. It could also be used to inject money into the Greek banks to solve the liquidity crisis.

None of which would invalidate the need for an alternative currency.

There is no means by which the debt will ever be repaid. Pretend and extend is a fiction. Remove the debt and Greece will be in budget surplus, or was before ECB turned off the cash flow.

The role of a Central Bank is to act as lender of last resort when banks have a liquidity problem. For Greece, the Central Bank is ECB. Far from acting as lender of last resort, ECB turned off the cash flow.

When a country has control over its own currency, it can devalue during an economic crisis. That option has not been open to Greece, instead we have seen a devaluing of its people through austerity.

Debt is being used as a mechanism to destroy the Greek economy and to enslave the people.

There are other measures that need to be brought in, for example tax transparency. The tax everyone pays should be published. This would go a long way to addressing tax evasion.

An alternative currency, creation of local currencies, is not itself sufficient nor should be seen as an end in itself. It should be implemented as part of a wider programme of advancing the commons, creating open co-ops,  part of  Plan C as advocated by P2P Foundation.

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3 Responses to “An alternative Greek currency”

  1. keithpp Says:

    Breaking the ECB’s ‘Corralito’ in Greece!

    FairCoop in Greece, you can join our group on the Fairnetwork:

    And if you can come to Crete this summer you might be interested in joining the FairCoop Summer Camp:

  2. keithpp Says:

    Interesting proposal for Scotland.

    Very much along the same lines as I proposed for Greece.

  3. keithpp Says:

    A street market in Heraklion is using a local currency Kouki and FairCoin and FairPay card.

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