This page has been archived and commenting is disabled.
The Grexit Into Gold-backed Drachma Conspiracy Theory - or - Plan Z
This gold horde that Greece is amassing will spike in value if they Grexit, particularly relative to the euro http://t.co/wIcHPP47qF
— ReggieMiddleton (@ReggieMiddleton) February 19, 2015
Greece backs drachma w/ gold, eliminating inflation fears, defaults on all eurodebt creating real drachma debt demand http://t.co/wIcHPP47qF
— ReggieMiddleton (@ReggieMiddleton) February 19, 2015
From Wikipedia:
Plan Z during 2012
"Plan Z" is the name given to a 2012 plan to enable Greece to withdraw from the eurozone in the event of Greek bank collapse.[16] It was drawn up in absolute secrecy by small teams totalling approximately two dozen officials at the European Commission (Brussels), the European Central Bank (Frankfurt) and the IMF (Washington).[16] Those officials were headed by Jörg Asmussen (ECB), Thomas Wieser (Euro working group), Poul Thomsen (IMF) and Marco Buti (European Commission).[16] To prevent premature disclosure no single document was created, no emails were exchanged, and no Greek officials were informed.[16] The plan was based on the 2003 introduction of new dinars into Iraq by the Americans[16] and would have required rebuilding the Greek economy and banking system ab initio, including isolating Greek banks by disconnecting them from theTARGET2 system, closing ATMs, and imposing capital and currency controls.[16]
- Wolfson economics prize
In July 2012, the Wolfson economics prize, a prize for the "best proposal for a country to leave the European Monetary Union," was awarded to aCapital Economics team led by Roger Bootle, for their submission titled "Leaving the Euro: A Practical Guide."[19] The winning proposal argued that a member wishing to exit should introduce a new currency and default on a large part of its debts. The net effect, the proposal claimed, would be positive for growth and prosperity. It also called for keeping the euro for small transactions and for a short period of time after the exit from the eurozone, along with a strict regime of inflation-targeting and tough fiscal rules monitored by "independent experts."
The Roger Bootle/Capital Economics plan also suggested that "key officials" should meet "in secret" one month before the exit is publicly announced, and that eurozone partners and international organisations should be informed "three days before." The judges of the Wolfson economics prize found that the winning plan was the "most credible solution" to the question of a member state leaving the eurozone.
... In February 2015 the Russian government stated that it would offer Greece aid but would only provide it in rubles.[31]
Kathimerini reported that after the 16th February Eurogroup talks Commerzbank AG increased the risk of Greece exiting the euro to 50%.[32] The expression used by TIME for these talks is "Greece and the Euro Zone dance on the precipice".[33]
Effect upon the European economy
Claudia Panseri, head of equity strategy at Société Générale, speculated in late May 2012 that eurozone stocks could plummet up to 50 percent in value if Greece makes a disorderly exit from the eurozone.[34]
Wait a minute! That's not possible. Goldmans Sachs says to buy EU eqities because of ECB QE and NIRP! We all know Goldman Sachs is always right, that's why more than half of hedge funds are following suit...
After all, do you remember Goldman's recommendation to sell the Swiss Franc? It worked out excellente', reference When Everybody Thinks They're Right, They're Almost Guaranteed to be Wrong! I Think This Is The Biggest Bubble In World History.
Bond yields in other European nations could widen 100 basis points to 200 basis points, negatively affecting their ability to service their own sovereign debts.[34]
Hopefully with no correlation whatsoever to US-based debt, cause Goldman also recommended - Long U.S. High-Yield credit risk: The recent underperformance of the U.S.High-Yield market should prove transitory, the bank reckons. I addition, what will the ECB do after all of this QE and NIRP if bond yields spike anyway? Well.. More NIRP and QE of course!
But, as early as March 2010, other European financial economists had supported the notion a swift Greek withdrawal from the Eurozone and the simultaneous reintroduction of its former national currency the drachma at a debased rate, arguing that the European economy as a whole would eventually benefit from such a policy change : "Such an abrupt readjustment might be painful at first, but it will ultimately strengthen the Greek economy and make the Eurozone more cohesive, and thus better at confronting the difficult economic circumstances and dealing with them." [15]
Effect upon the world economy
Europe in 2010 accounted for 25 percent of world trade, according to Deutsche Bank.[34] Economic depression within the European economy would ripple worldwide and slow global growth.[34]
Immediate economic fallout inside Greece
The theory behind the readoption of an independent Greek national currency is that such a currency, freely floating on the international markets, would be able to depreciate in value and thus Greek exports and shipping services would become more competitively priced on the world market. Imports would be correspondingly more expensive, encouraging domestic production in Greece. However, persuading the Greeks and their businesses to replace their euros with a currency intended to collapse in value would be more than somewhat challenging, and current Greek debts would remain denominated in euros.
On 29 May 2012 the National Bank of Greece warned that "[a]n exit from the euro would lead to a significant decline in the living standards of Greek citizens." According to the announcement, per capita income would fall by 55%, the new national currency depreciate by 65% vis-à-vis the euro, and the recession which Greece has been in for five years would deepen to 22%. Furthermore, unemployment would rise from its current 22% to 34% of the work force, and the inflation, which is currently at 2% would soar to 30%.[20]
According to the Greek think-tank Foundation for Economic and Industrial Research (IOBE), a new drachma would lose half or more of its value relative to the euro.[17] This would drive up inflation, and reduce the purchasing power of the average Greek. At the same time, the country's economic output would drop, putting more people out of work where one in five is already unemployed. The prices of imported goods would skyrocket, putting them out of reach for many.[17]
Analyst Vangelis Agapitos has estimated that inflation under the new drachma would quickly reach 40 to 50 per cent to catch up with the fall in the new currency's value.[17] To stop the falling value of the drachma, interest rates would have to be increased to as high as 30 to 40 per cent, according to Agapitos.[17] People would then be unable to pay off their loans and mortgages and the country's banks would have to be nationalised to stop them from going under, he predicted.[17]
But what if Greece put a floor under its currency with a peg to gold and a soft redemption policy (with a borderline prohibitive premum to be paid if the drachmas were actually redeemed for the gold)? Such a floor may actually make the Drachma preferable to what would be a rapidly destabilizing euro with a guarantee of further debasement, QE and volatility to come. Under such a scenario, capital may actually fly into the drachma, particulalry of they default on current euro based debts and wipe the slate clean. Concerns about paying back euro denominated debt with the drachma are ill founded if the euro based debt faces mass defaults. Look at the chart below. Someone was at least thinking about this idea.
Below the chart is a trade setup to monetize such an event within three months.
»
- advertisements -
It is 2015! Money must be programmable! It must be instanteously transferrable. PM's have VERY little intrinsic value relative to their market values (above their utility value).
Furthermore, Bitcoin is not money. I have made that clear multiple times. Bitcoin is the value transfer system that the bitcoin digital currency application uses as rails. "b"itcoin is money. "B"itcoin is ultimately more valuable than mere money.
"b"itcoin has intrinsic value, is durable (particularly in its physical form, but in its digital form as well.... is easily divisalb,e has consistent quality, valuable relative to its weight and is relatively scarce.
The definition that you are using is outdated, coined in a time when money could not do what bitcoin - or Bitcoin, could. I posted an entire page describing what many of you called money, and programmed it to do just about everything that JP Morgan or Goldman Sachs does. Can you take a $1 dollar bill and program it to take the place of Morgan Stanley's prime brokerage arm? Can you take a bar of gold and program it intermdiate our medical capitation provider? If you answered no to any of these questions, you just admitted you see the utility and intrinsic value of Bitcoin.
To the enire ZH crowd, until you are able to shake and lose the concept of Bitcoin as a digital currency, or money, or coins... You are never going to be able to grasp the enormity of the opportunity at hand. Bitocin is not the money of the internet. It is the internet of money, and value transfer, and consensus decision making, and unmalleable verification, and a whole host of applied uses not even concieved of yet.
Whenever you hear someone discuss Bitcoin as currency or money, they likely just don't get it. Be the smartest dude in the room and see the paradigm shift BEFORE it unfolds.
Regg-- If you can't see it, smell it, taste it or touch it, to me it is imaginary.
Nice avatar.
There are hundreds, if not thousands of soveriegn currencies. do they theaten the hegemony of the USD?
Yes, just so. Every real currency has a defined domain in which it is WORTH SOMETHING, and can be converted into goods and services. Pretend currencies whether wooden nickles, scrip, or bitcoin, don't have that protection, so their value is always on a downward arc as they LOSE CONVERTABILITY.
PMs have no such issues.
Goldman Sachs was behind the bailout of the Communist regime in Venezuela, they literally kept the "Socialist looter dream" alive for 1 more year http://www.bloomberg.com/news/articles/2015-02-17/venezuela-s-day-of-rec...
This is a "hey look a UFO" distraction, there is no Grexit, no Greece, only Greek debtors with no "state" or "sovereignty" to hide behind.
Who did Goldman dump the "chump bonds" on?
Who gives a shit
If I remember they had about 112 metric tons. At 10:1 gold backed, that'd allow (if my memory serves me) production of 10% gold backed (or even gold containing) drachmas amounting to about $3800US per capita.
It could work if Greece made it very, very clear that reforms vis a vis corruption including intense but fair tax collection were instituted.
It could work very well.
The other alternative is to have the entire wealth of the country systematically stripped, turning the Greeks into lifelong serfs.
The same sort of thing is happening here though differently and in a much slower manner.
Funny, 20 years ago a family with an income of $40k and a variable debt load of $60k which when hit with a tragedy such as a loss of a job would also be hit with multiple over-limit/late fees (on credit cards and lines of credit, ignoring student loans) and a raise to a 29.99% interest rate resulting in an ever-increasing debt that can never be paid would be settled in bankruptcy.
But the powers that be quietly (the 1/2%) took away bankruptcy as an option for 98% of everyone about a decade ago. Serfs there, serfs here....
Forget gold backed. Imagine Greece minting 3.33% Gold Gold/brass allow coins (33.3x multiplier effect or $129 billion USD it "created") on a trial basis, made legal tender by the government yet had its own blockchain to travel on for instantaneous transfer and impeachable record keeping. This coin would likely be piled into from an interational perspective, and traded like hell (digitally, remember) by the momo guys once they are able to wrap the groupthink minds around blockchain tech.
A lot of liquidity and demand would be dumped into that small real-time experiment, paving the way for the real thing, and issuing one hell of a threat to the Troika. Now, I'm sure there's some legal roadblock to a member state creating a side currency, but blockchain technology can remedy that. Greece can rule it a commodity, yet accept it as tender for payment of taxes.
Greece would be a very, very dangerous state if they had someone like me there pumping them ideas!
... withdrawal from EMU
would entail: (i) creating a new currency or re-establishing the old currency of the withdrawing
Member State; (ii) refunding the departing national central bank’s (NCB) contribution to the
European Central Bank’s (ECB) capital, and reimbursing its foreign reserve assets transferred to
the Eurosystem; and (iii) transferring full monetary sovereignty back to the seceding NCB, with
all the practical difficulties and legal uncertainties that this would involve for outstanding
monetary policy operations, especially in the case of unilateral withdrawale, withdrawal from EMU
would entail: (i) creating a new currency or re-establishing the old currency of the withdrawing
Member State; (ii) refunding the departing national central bank’s (NCB) contribution to the
European Central Bank’s (ECB) capital, and reimbursing its foreign reserve assets transferred to
the Eurosystem; and (iii) transferring full monetary sovereignty back to the seceding NCB, with
all the practical difficulties and legal uncertainties that this would involve for outstanding
monetary policy operations, especially in the case of unilateral withdrawal.
Think anti-‘Euroisation’. Defined as the opposite of official and total substitution of a national currency by the euro, outside
the framework of the Treaty for the formal adoption of the euro by EU Member States.
You say forget gold backed but you still have a gold component.
I recall making a prior comment on cryptocurrencies and suggested that it might work if tied in some way to precious metals.
I recall you/ Fonestar / some other BTC pumper shitting all over the idea, even going so far as to say that it didn't make sense.
Yet , you appear to have arrived at the idea.
Reggie,
"Greece would be a very, very dangerous state if they had someone like me there pumping them ideas!"
You might have these great idea Reggie but you clearly don't have enough influence to be believed.
It is quite clear that the whole banking system is one great ponzi fraud and holding the governments to ransome.
As we all know the can is being kicked up the road.
It could all be brought to an end by a campaign that everyone draw out their money in cash from the banks.
I would think 20% attempted withdrawl would destroy the banking system within one month.
THAT'S the Reggie I know and love! I'll assume Yannis Varafoukis has already received your suggestions. Not only are you going to make history with this, you are going to change the world.
Dangerous? How can a brilliant solution to an almost unsolvable problem, a solution where everyone ends up better off WorldWide, be dangerous? Only to a Bankster is it dangerous.
Question # 1, of course - Does Greece have any gold ?
Look at the chart. It appears as if they've been stockpiling.
IN THEORY they have the largest goldmine in Western Europe.
That's a lot more valuable than "gold in reserve" since it will be the money in the mine that will back the money and not the gold that is held.
Currently that mine is owned by a Canadian company....no doubt with a lot of Greeks who own that company (and the debt of all those Greek banks.)
Greece is a country. There is nothing to prevent the actual "country of Greece" from saying "too bad" to the folks who have only profited from Greece's misery.
Again...I don't see Goldman Sachs coming to the rescue either...nor the current clowns who are no doubt preparing to turn Greece into their next "Kosovo on the Aegean."
The irony of course is that Wall Street never had so much money.
Maybe JP Morgan will do something?
Bwhahahahahaha.....
Sorry...I lost my mind on that one.
Germany has been keeping it safe for the Greeks since the 1940s
From an article on kitco.com
Where’s Greece’s Gold?
The 111 tonnes of gold owned by Greece is in one of three central banks and perhaps spread throughout the three. These banks are the Bank of England, the Banque de France and the U.S. Federal Reserve. We are of the opinion [the Bank of International Settlements would never disclose the facts] that Greece’s gold was first used in some of the over 500 tonnes of gold/currency swaps executed two years ago and unwound last year by the B.I.S.
But who knows really.....
Does the U S A ?
If history tells us anything, it's that you do not need Gold to print a currency. But you can BUY Gold with any paper currency. Braintards...
The sharks are swimming/ ( DUP)
The sharks are swimming/
Ready to join BRICS with Argentina and others.
why dont they default and stay in the euro?
whats the point of having own drachma, just to make it a hard currency when even the (now) inflated euro is too hard for them?
serious question
Because the euro is not managed to the benefit of the Greeks. For all practical and economic intents and purposes, the euro is the deustch mark reborn. If the Greeks don't have control over thier own currency, they are effectively not a sovereign nation, from an economic perspective. That's partially how they got into this mess to begin with... partially!
Good comment tho. What's Europe going to do? Accuse Greece of counterfeiting?
They already print euros.
Just print MOAR!
HOLD THE BOAT
GREECE PLEDGED THEIR GOLD AS COLLATERAL FOR ONE OF THE TRIOKA'S LOANS, NO?
So if they default, the gold isn't theirs.
Now, were's that gold stored, huh?
The lenders can seize the gold pledged as collateral, "folks"
http://www.zerohedge.com/news/greece’s-lenders-have-right-seize-national-gold-reserves
>>> The lenders can seize the gold pledged as collateral, "folks"
This is true. Lenders can indeed seize hard assets such as gold held by national governments. BUT -
But sovereign nations have the power to impose taxes. Such seizures could be adminstratively taxed at 99% of the value seized. Tax to be prepaid before gold is transported. And of course, if the gold isn't actually in Greece then it doesn't exist anyway. Good luck anyone trying to seize non-existent gold.
GOLD for Monopoly Money. Fair exchange.
This blog is a great overview of the debt based monetary system ponzi. It starts off a bit slow with the goldsmith bankers but lays some good ground work that is used later in the first post. The bitcoin stuff gets a bit out there but still interesting. I hope the blogger continues to post http://debtcrash.blogspot.com/
Greeks that become dual-citizens in the U.S. Can counterfeit to their hearts content like the dual citizenship Israelis in the Federal Reserve.
They could create shell companies, "start ups" to smuggle billion$ to their friends.
If a Greek exit would crash European equities by 50% then why can't Greece get together with their creditors and have them short EU equities. Greece will then declare a massive default even paying back all the creditors. Then suddenly, Greece could declare that it changed its mind and will continue in the EU. Everyone would live happily ever after.