Saturday, July 16, 2011
It's all Greek to me
RE: the Euro crisis, there is an obvious at least partial solution that I have not seen discussed. The problem is the stickiness of wages and prices on the downside. To take the previously discussed example of Greece, were it not in the Euro, the Greek currency would be devalued and Greeks would work for less. This would keep them employed though their labor would be less valuable in world currency terms. As our language gives evidence, '2-4-6-8 who do we appreciate,' pieces of 8, the Spanish currency, were once legal tender in the US as was British currency. Why can't the Greek government pay its workers and pensioners in drachmas and make the drachma a legal tender in the country along with the Euro. It could be floated relative to the Euro, started at a useful conversion rate. A 'useful rate' that the Greek government and employers could see continuing employment at a lower pay scale.