by Warren Mosler
A bit of press for my endorsement of Bernie Sanders for President after a chat with Stephanie Kelton which included how they’ve been working together on his economic agenda.
Varoufakis completely misses the point.
First, the only way public debt, for all practical purposes, need be ‘paid back’ is via refinance.
Second, with the implied guarantee of the ECB’s ‘do what it takes’ policy, rates are down and market forces not applicable for those members ‘in good standing’ and not at risk of losing that ECB support.
Third, Greece, and the entire euro zone, is in desperate need of larger deficits/more public debt, either through tax reductions or spending increases (that choice is political). So even if Greece ‘wins’ on all points currently being negotiated the economy still deteriorates, just at a slower pace.
Fourth, if Greece attempts to go to drachma or any kind of ‘parallel currency’, based on discussion I’ve heard and read, it will most likely be a case of out of the frying pan and into the fire. The expertise required to do it right is not evident at any level.
June 15 — Greek finance minister Yanis Varoufakis said that his country desperately needed some of its debts written off if it is ever to pay anything back.
“Only [with debt cuts] can we guarantee the repayment of as much of our debt as possible and actually deliver,” Varoufakis told Bild on Monday.
He claimed that he would immediately agree to further financial aid from the country’s creditors – which he and Prime Minister Alexis Tsipras have until now resisted due to the harsh conditions attached to it – if some of Greece’s debts could be cancelled………