Courtesy of Mish.
There’s theory and there’s practice. There’s also practical matters even if theory and practice are in alignment.
People keep emailing me stories that Greece can and will print euros, so it will never run out of money. Such stories have been running for years actually.
Let’s take a peek at a few of them, and why they are all false from a practical point of view.
June 15, 2012: What if Greece Just Printed the Euros It Needs?
Writer Valentin Petkantchin asked “Why would an extreme leftist such as Tsipras bother switching to drachmas – with the disastrous consequences for the Greek population and his own political future – when Greece already has the capacities to simply print euros?“
His twofold view was twice wrong.
- On one hand, Greece can create euros in a few “clicks” under the cover of the opaque Emergency Liquidity Assistance (ELA) program. Greece is already estimated to have created up to 96 billion euros to help its banks using the ELA.
- On the other hand, the Greek central bank is able to turn on the printing press the old-fashioned way. Greece has the physical means to create any amount of euros it wants.
We have already seen what can and has happened to the ELA.
I will get to the practical side of “Greece has the physical means to create any amount of euros it wants” in just a moment.
July 5, 2015: ZeroHedge wrote Greece Contemplates Nuclear Options: May Print Euros, Launch Parallel Currency, Nationalize Banks.
Says ZeroHedge: “While Greece and the ECB may be on the verge of a terminal fall out, Greece still has something of great value: a Euro printing press.“
July 5, 2015: Breitbart writes Greece will Never Run out of Money–It Will just Print More….
