Greece exiting the Euro?
This weekend Greece is having elections where it’s possible that the people will reject the recent bank bailout because that bailout seemed to do nothing more than to put more money into banks while forcing the Greeks to take on even more debt. The result might be that Greece is forced out of the Euro.
Now, you might be saying to yourself, the Greeks got themselves into this mess.. screw em..
Well.. under normal circumstances.. Greece would be screwed.. but there would also be a light at the end of tunnel.
Instead, by being part of the Euro, Greece is not only screwed.. but there is no light at the end of the tunnel.
Let me explain.
A sovereign nation with its own currency pays off its debts by printing money. But the result of printing too much money devalues the currency in relation to other currencies.
But, the result is Foreigners start flooding into the country because now it is so cheap to visit! They also start buying stuff like crazy.
Pretty soon, so much money flows into the country, that eventually prices work their way back to normal.
But, because Greece is part of the Euro.. they can’t do any of that.
Instead they are forced to borrow more and more money while no new visitors, and no new money flows into the country. It becomes a downward spiral.. just like the Titanic sinking as British Politician Nigel Farage so eloquently put it.
That is why Greece is threatening to leave the Euro… and if that happens Spain, Italy and France may soon follow.
What do you guys think?
Let me know in the comments below.
Oh, and is something similar happening in this country?