October 3, 2023

News Cymru

Two sides to every headline

Ekathimerini spotted this important statement

In his interview with CNBC, Papademos also stressed the need for wage reforms. “What you have to do is to improve competitiveness, which partly depends on wage moderation, an internal devaluation and a reduction of prices and wages,” the premier said.

This is the original article and video http://www.cnbc.com/id/46004247

So there you have it, the Papademos regime has come clean and stated what their true mission is in Greece and that is to make people poorer. That is their solution to Greece’s problems.

By restricting the amount of cash available in the country the Papademos regime want to make it more expensive for Greeks to import product from outside of Greece.

This is the way central banks increase “competitiveness”. By making people in one country so poor they can no longer afford to buy things from other countries forcing the country to make more things inside the country.



Will making  Greeks poorer really help Greece be more competitive?

It has a chance, in the same way China is competitive. China competitive not because it is a hub of innovation or the entrepreneurial spirit is inside every Chinese (although it may play a part). China is “competitive” because it’s people get paid so little.

Papademos must be looking at the communist regime in China and thinking, “this is what I want for Greece”.

How is Papademos and the central banks going to make Greeks poorer through internal currency devaluation?

Simply be reducing the amount of money in circulation. Not so much a “devaluation”, to call it a devaluation is a blatant play on words, not so much a devaluation but a deflating of the Greek economy.

The Greek central bank, like all central banks have the monopoly on the money supply. The monopoly gives central bankers god like powers over the people. Papademos has stated that he wants to reduce the amount of money in circulation in Greece, not to make the country “more competitive” but to make the Greeks consume less.

If Papademos and the central bankers were genuinely interested in increasing the competitiveness of the Greek economy they would try to fix the cause of the problems. For Papademos to talk about devaluation and not address the principle measurement of competitiveness shows how the “restructuring” and “measures” are, in my opinion, a complete smoke screen.

Greece is not uncompetitive simply because a central banker decides people are paid too much. Wages are a tiny part of the whole picture. Tax, rules and government regulations are by far the biggest contributors to a lack of a countries combativeness yet Papademos does not mention any of these critical issues.

Papademos saying that a reduction in wages and an internal devaluation are the answer shows that there is a bigger agenda.

As I mentioned, it is impossible for Greece to undergo an “internal devaluation”. For a central banker to come out and say an internal devaluation is possible when a country has little or no control over the value of the currency in the hands of citizens either shows Papademos and the central banks are well out of their depth, or they are simply trying to mislead people.

If Greece had the Drachma an internal devaluation would take the form of an increase in the amount of money in circulation. This is clearly not going to have any effect in Greece because it has the Euro.

So the only other alternative is to reduce the buying power of the people (people not currency) is to reduce the amount of money in circulation. Papademos is in effect saying he wants to reduce the value of the Greek people by restricting the amount of money Greeks can get paid for their work and/or property.

If the trade deficit is not addressed then this is what is going to happen. The value of Greek labour is simply going to be made worthless simply because a central banker wanted it so.

This devaluation of the Greek people will have a big effect on the Greek trade deficit but the effects will not be down to positive reasons like the Greeks being more productive and exporting more stuff abroad or increasing the size of the tourism industry.

The “positive” effects on the Greek trade deficit will be down to Greeks not having enough money to buy the thing they want from outside of the country.

It is worrying for me looking in on the Greek situation and seeing the tax rises, the increasing regulations and how the stated aim of the Papademos regime is to devalue the currency. It shows that rather than trying to rejuvenate the Greek economy, the aim is simply to reduce the amount of things that Greeks can consume, in other words, the simple goal is to make Greeks much poorer.

And we are not talking about luxuries not being able to be bought by ordinary Greeks in the future, we are talking about the prices of necessities going through the roof, maybe not in turns of Euros (which would really expose what was going on ) but in terms of the ability of people to buy things like petrol because they simply do not have the money.

The only way Papademos can devalue the work and property of the Greek people is by restricting the money supply and it is only possible for Papademos to do this because the supply of currency is a monopoly of the central banks. There is no competition on the supply of the currency.

If Papademos was really serious about restoring or increasing the competitiveness of the Greek economy taxes, rules and regulations would be the first things to be reduced. To increase the competitiveness of a country you have to reduce the cost of doing business which in turn increases the buying power of the people even though they may have less money.

There is no sign that Papademos will do this, if anything the opposite is happening, not so much under Papademos but certainly under Papandreou.

As I have mentioned in other articles it is possible for Greeks to take back control of their own country but it will take some radical changes and a complete reorganization of the way the country is run not to mention a complete change in people’s mentality.

The power of central government needs to slashed with power being handed back to small independent Greek city states/counties.

In addition, the god like powers of the central bankers needs to be stripped away. Greece needs to return to a commodities based currency, based on Gold or Silver with any business being free to obtain a license to issue the Greek currency on the condition people can exchange their currency for Gold or Silver at the issuing bank, on request.

These 2 changes although massive should ensure that Greece has a balanced trade account with the rest of the world which is the key to Greek independence and prosperity. The key to Greek independence and prosperity is not enforcing lower wages on Greek people by artificially restricting the money supply.

And all this asks one very interesting question, given that Papademos’s stated aim is to reduce the amount of Euro currency in Greece, how does he expect the Greek government expect to be able to service its debt. Surely an internal devaluation will guarantee a government default?

Get the latest updates in your inbox