tag:blogger.com,1999:blog-5908830827135060852.post5390050024759407893..comments2024-03-01T02:40:14.946-05:00Comments on Bond Economics: Capital Controls And Greek EurosBrian Romanchukhttp://www.blogger.com/profile/02699198289421951151noreply@blogger.comBlogger5125tag:blogger.com,1999:blog-5908830827135060852.post-40589339544669432532015-02-17T15:49:02.033-05:002015-02-17T15:49:02.033-05:00The existing bonds were already defaulted upon; th...The existing bonds were already defaulted upon; there are a few left in private hands, but Greek debt is now mainly held by euro area gov'ts and the IMF.<br /><br />What's at issue for Greece is the flows in the banking system. Deposits are flowing out of Greek banks. Additionally, they need to pay for imports, which implies emitting liabilities that foreigners will accept.Brian Romanchukhttps://www.blogger.com/profile/02699198289421951151noreply@blogger.comtag:blogger.com,1999:blog-5908830827135060852.post-21518372092059249052015-02-17T13:23:25.790-05:002015-02-17T13:23:25.790-05:00Legal tender is a specific concept in law relating...Legal tender is a specific concept in law relating to settling a debt in court and can always be refused on the 'good faith' principle. Courts after a separation by Greece would likely determine that Greek notes backed by liabilities at the Greek Central Banks are 'not Euros' for the purpose of EU law<br /><br />Automatic machines may struggle of course. But that is part of the cost of the ECB deciding to press the nuclear button. NeilWhttps://www.blogger.com/profile/11565959939525324309noreply@blogger.comtag:blogger.com,1999:blog-5908830827135060852.post-9831816288784677162015-02-17T13:21:32.190-05:002015-02-17T13:21:32.190-05:00In past posts, you have described government debt ...In past posts, you have described government debt as "forward money".<br /><br />In his most recent post, Neil Wilson states "It helps if you realize that governments effectively spend bonds."<br /><br />In my comment to Nick Edmond's post <br /><a href="http://monetaryreflections.blogspot.co.uk/2015/02/more-on-inter-generational-implications.html#comment-form" rel="nofollow"> "More on the Inter-Generational Implications of National Debt" </a> , I write of government debt as macro-currency.<br /><br />I wonder if all three descriptions of government debt are based on the same principle: 'money is micro-economic currency and 'government debt is macro-economic currency' ?<br /><br />We can apply the distinction to the situation in Greece. The Greece government apparently has enough micro-economic money to pay government bills for a short time. Over a longer period, the Greek government does not have a balanced cash flow of micro-economic money. This situation will force the Greek government to seek to sell macro-economic debt to raise micro-economic money. How does the Greek government respond if it can not sell new Greek Government Bonds?<br /><br />If we explore this micro-macro-economic distinction, it seems to me that we would focus on who holds Greek bonds and where they domicile . Who would suffer if existing bonds defaulted and who would give micro-economic money to Greece after a Greek macro-economic debt default?<br /><br />I don't have answers here, only conceptions and alternative paths to understanding.Roger Sparkshttps://www.blogger.com/profile/01734503500078064208noreply@blogger.comtag:blogger.com,1999:blog-5908830827135060852.post-9700588856593039642015-02-17T12:08:45.765-05:002015-02-17T12:08:45.765-05:00Good point. The question that I am unsure about is...Good point. The question that I am unsure about is whether these marking are recognised in legal tender laws.Brian Romanchukhttps://www.blogger.com/profile/02699198289421951151noreply@blogger.comtag:blogger.com,1999:blog-5908830827135060852.post-85894546636514111502015-02-17T11:28:35.414-05:002015-02-17T11:28:35.414-05:00"The only loose end would be to cut Greece..."The only loose end would be to cut Greece's capacity to print "international euro" notes and coins."<br /><br />That is fairly straightforward. The obverse of Greek Euro coins have a national pattern, and the Notes have 'Y' in the serial number. <br /><br />I've got a Greek 10 Euro note in my foreign change pot. <br /><br />You can always identify which country issued the Euro you have in your pocket. NeilWhttps://www.blogger.com/profile/11565959939525324309noreply@blogger.com