By Nikos Igglesis.
In his detailed piece which was published on analyst.gr, the economist Vasilis Villiardos puts forth numerous questions regarding the manner in which Greece could return to a national currency and deal with the issue of its debt, while also addressing the geopolitical implications of such a move.
Our response to this is that Greece is being looted systematically over the past six years by the Fourth Reich and by the global capital markets.
Mr. Villiardos begins his analysis by addressing questions concerning the debt—questions, though, which cannot be answered without first having provided responses regarding the national currency. He writes that Greece is in danger of being looted if it remains in the Eurozone. Our response to this is that Greece is being looted systematically over the past six years by the Fourth Reich and by the global capital markets.
Aside from the economic and societal catastrophe that it has faced, the Greek people are also the victims of psychological warfare, being presented with coercive “dilemmas” and false choices, with the goal of creating, amongst the opponents of the status quo, a sense of despair, resignation, and surrender to the demands of the lenders and their domestic collaborators. This is why, from the first moments of the crisis, Greece’s media outlets eliminated any meaningful debate that would have questioned the memorandum agreements or the “one-way street” of remaining in the Eurozone.
The Greek people must smash the chains of debt slavery, which have kept them in bondage, and break free of the Euro-Deutsche Mark prison
The Greek people must smash the chains of debt slavery, which have kept them in bondage, and break free of the Euro-Deutsche Mark prison, if they want to have any hope of surviving as a national entity and not as modern-day colonial serfs.
The basic components of an alternative plan for the liberation of Greece from the chains of its lenders and the restoration of the country’s sovereignty follow below.
The Exchange Rate
The introduction of the new national currency, the new Drachma, at an exchange rate of 1:1 with the euro. Everything, including wages, pensions, incomes, the prices of goods and services, and all domestic loans will be converted, from the first moment, to the new national currency at this rate of exchange. This decision will have been preceded by a governmental decision to nationalize the Bank of Greece, freeing it from the European Central Bank (ECB) mechanism, installing new leadership at its helm, and restoring its right to issue currency. The Bank of Greece will, at the very least, return to its pre-euro status. Immediately following these measures, the Bank of Greece will “lock in” the new 1:1 exchange rate.
The setting of a “fixed” exchange rate has been enforced many times in the past and continues to be implemented today by numerous countries.
The setting of a “fixed” exchange rate has been enforced many times in the past and continues to be implemented today by numerous countries. Notably, Greece, for approximately 20 years, maintained a fixed exchange rate of 30 drachmas to one U.S. dollar. Argentina maintained a fixed change rate for approximately 10 years, of 1 peso to one U.S. dollar, indeed with the blessings of the International Monetary Fund (IMF). The bankruptcy of Argentina in 2001, in fact, was not a result of this fixed exchange rate, but instead, of the free movement of capital out of the country. Bulgaria today maintains a fixed exchange rate of 1.9558 lev to one euro. The Swiss Central Bank “locked” the exchange rate of the Franc to the euro in September of 2011 and maintained this fixed exchange rate until January 2015, when the Swiss Franc was devalued. The Chinese Yuan maintains a fixed exchange rate with the U.S. dollar, and whenever an adjustment to the exchange rate is deemed to be necessary, this change takes place following a decision of the government, and not one of the financial markets.
These examples demonstrate that a “fixed” exchange rate can and must be enforced. In this way, the new drachma will not be freely traded in the financial markets and will not be the target of speculators, with the risk of devaluation that this would entail. Therefore, anyone who speaks of the risk of devaluation is simply terrorizing the public. Through such a transition, with a fixed 1:1 exchange rate, the prices of imported goods and services will not increase and there will, as a result, not be any inflationary pressures.
In addition, Greece will not need to squander its foreign exchange reserves from its exports and from its tourism and shipping industries in a desperate attempt to maintain the value of the new drachma.
All bank deposits—of both personal and business accounts—can remain in euro and serve as foreign currency deposits. In this way, the citizens, from the first moments, will not have to worry that there will be a loss in the value of their assets that would result from a hypothetical devaluation of the drachma. Since, from the outset, all transactions will take place in the new currency, the deposits that are withdrawn and used in the domestic marketplace will be converted to drachmas, at the 1:1 rate of exchange. Conversely, when deposits are made for external payments (such as for imports of goods, tourism, studies or health care abroad, etc.), they will be made in euros.
Ensuring a Sufficient Supply of Foreign Currency Reserves
The payment of external obligations (both personal and business), such as for the import of goods, will take place with foreign currency reserves: either those which depositors will possess in their accounts, or via the conversion of drachmas into euros, dollars, or other currencies through the banking system, as was the case prior to Greece’s entry into the Eurozone. The same will be true for personal and business loans held in overseas banks, but not for loans (such as the ELA) which have been issued by the European Central Bank (ECB) to Greek credit institutions, which will be adjusted along with the debt (see below).
There need not be any concerns regarding the availability of a sufficient supply of foreign currency reserves. Greece maintains a current account balance, which means that through its exports, tourism, and its shipping sector, it earns enough foreign currency to pay for all of its imports. There will be no shortages in the marketplace, nor will rationing need to be implemented for certain goods.
The current account balance, from a deficit of 18 billion euros in 2009, achieved a small surplus in 2015, largely as a result of the internal devaluation of the past six years, which reduced incomes and, as a result, led to a decline in imports—while exports increased, albeit modestly. Indeed, the surplus would have been significantly larger had a decision not been made in June of 2015—retroactively implemented from 2013 onwards—to change the manner in which the current account balance was calculated. For instance, 1.5 billion euros from the black market imports of drugs, tobacco products, etc. are now calculated. We note here that in an official statement released by the Bank of Greece for 2014, the current account balance is shown to have a surplus of 1.8 billion euros. There is only one reason for a national government to devalue its currency: in order to cover a deficit in its current account balance. In Greece though, this deficit has been eliminated, which means that the devaluation of the new drachma will not be necessary. Indeed, this devaluation has already taken place, in the form of the internal devaluation which has seen wages, pensions, and other forms of income reduced. As a result of this internal devaluation, a corresponding currency devaluation will not be necessary.
We do not believe that trade reprisals will be enforced, because the lenders will have more to lose from such an action than Greece.
Mr. Villiardos expresses his concern that the current account balance will once again achieve a deficit, as a result of reprisals that will be implemented against Greece by its lenders. We, however, do not believe that trade reprisals will be enforced, because the lenders will have more to lose from such an action than Greece. In international relations, contrary to interpersonal relations, financial interest takes precedence over revenge. In any case though, an independent Greek government will be in a position to implement numerous measures to protect its trade balance, with regards to imports, which in the interest of brevity we cannot analyze in further detail here.
The Public Debt
The overwhelmingly large public debt (€321 billion in 2015) is impossible to repay, and this is a fact that is known to all. The discussions which are taking place regarding the supposed sustainability of the debt are based on the assumption that Greece will be able to repay, on an annual basis, the interest that is levied on this debt through the refinancing of the principal. This would mean, in other words, that Greece will agree to new loans which will be used to repay old loans that have reached maturity.
When Greece bolsters its economy with the new drachma and it will no longer be in a position where it can be blackmailed by its lenders through the threat of withholding liquidity or shuttering the banking system, it will be in a position to implement a solution regarding the debt.
The first immediate actions will be the renunciation of the three memorandum loan agreements and the subsequent stoppage of payments. This will result in a protracted renegotiation with each of the many categories of lenders which exist. The second action will be a full audit of the debt, in order to determine which portions of it are illegal, illegitimate, or odious and which, as a result, can be written off, as foreseen by international law.
The third action would be to immediately demand from Germany, through an official public pronouncement, the repayment of the forced wartime loan, war reparations, and compensation for wartime victims. According to the Greek General Accounting Office, these obligations on the part of Germany total €278.7 billion.
The strongest weapon which Greece will have in its arsenal, once it has returned to its national currency, will be its ability to repay the portion of the debt which it will recognize, with new drachmas.
The strongest weapon which Greece will have in its arsenal, once it has returned to its national currency, will be its ability to repay the portion of the debt which it will recognize, with new drachmas. The largest portion of the public debt today (excluding the debt owed to the IMF) is not in foreign exchange, but in the “official” currency of Greece, the euro. For this reason, when we depart from the Eurozone, we should not repay the debt in foreign currency but instead, with our new national currency. In other words, we will do exactly what we did in 2001-2002, when we entered the Eurozone. In 2001, 75% of Greece’s debt was internal, in drachmas (36 trillion drachmas) and in one night, on January 1, 2002, it was converted to euros (€105 billion), therefore becoming debt in foreign currency, since our country cannot issue euro notes of its own. George Friedman, the head of Stratfor, published an article in April of 2015 which stated, among other things, that “the Greeks print drachmas and announce (not offer) that the debt would be repaid in that currency.”
With the new drachma, Greece could begin the financing of a large-scale national program of public and private investments.
With the new drachma, Greece could begin the financing of a large-scale national program of public and private investments. From the earliest moment, the economic situation of the country will cease worsening and will instead begin to improve. The increased circulation of currency will be targeted exclusively to new, productive investments in the agricultural sector, as well as small- and large-scale industry. Wages and pensions will rise and unemployment will gradually decline, for as long as GDP increases.
Vasilis Villiardos puts forth, among other questions, a query as to whether Greece is in a position to proceed with such actions, from a geopolitical, economic, and social point of view, without being at risk of facing the threat of significant losses in terms of its territorial sovereignty. What is certain is that a bankrupt country with a destroyed economy and a society that is disintegrating, is not in a position today to protect its national interests. We note that the lenders, through the memorandum agreements, are even demanding reductions in the budget of the Armed Forces. Greece is, in essence, being governed by its cabal of lenders, who not only control the country’s economy, but are also forcing their geopolitical interests upon Greece.
Our country does not need “bosses” who will decide its fate, but instead, allies whose interests are aligned with those of Hellenism. As long as our country remains in a state of dependency, it will not be able to develop true alliances, nor will it be taken seriously on the global stage, as it will be considered a dependent state that acts in accordance with the whims of its masters—just as a colony, in other words. A basic component of the geopolitical strategy Greece could implement, in order to protect itself from enemies and “friends” alike, is to no longer be seen as being in a state of dependency. The first decisive step that would be taken in order to achieve this would be departure from the Eurozone and restoration of national sovereignty.
Mr. Villiardos puts forth a number of other questions which cannot be answered within the limited scope of one single article. Those who are interested, however, in reading a complete plan for how to save Greece, can read my book, “The Grexit Revolution: The Plan,” issued by Livanis Publications, with a prologue by Maria Negrepone-Delivani (Professor of Economics and former provost at the University of Macedonia), while the chapter titled “The Geopolitical Dimension,” has been written by Konstantinos Grivas (instructor at the Evelpidon Military Academy, in the Department of Turkish and Modern Asian Studies at the University of Athens, in the National Defense College, and in the School of Management and Administration of the Hellenic Air Force).
In closing, I would like to emphasize that there is no easy solution. Everything depends on the decisiveness of the Greek people to survive honorably and to restore the national sovereignty of their country, for themselves, for their children, and for their homeland. This will be a battle of life and death with the powerful lenders, the domestic collaborators, and the “Fifth column” of the mass media propaganda machine.