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Guest Post: A Crazy Idea That Might Just Work: Greece's New Currency, The U.S. Dollar

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Submitted by Charles Hugh Smith from Of Two Minds

A Crazy Idea That Might Just Work: Greece's New Currency, The U.S. Dollar

There is an undeniable internal logic to the crazy idea that Greece should jettison the euro and accept the U.S. dollar as its national currency.

Before you dismiss my crazy idea out of hand, hear me out. It might not be as crazy as it seems on first blush.

I have a straightforward three-point plan to set Greece on a sustainable, positive pathway. But before we can understand how the plan resolves Greece's no-win situation (yet another Kobayashi Maru scenario), we first need to understand very clearly why the euro currency failed.

I have covered this many times before:

Why The European Union Is Doomed (March 28, 2011)
Why the Eurozone and the Euro Are Both Doomed (June 23, 2011)
Three More Reasons the Eurozone Is Doomed (September 22, 2011)
Yet Another Reason Why the Euro Is Doomed (October 17, 2011)

If we had to distill the dynamic down to a single paragraph, it would be this: By accepting the "strong currency" euro that was supported by promises of fiscal prudence, Greece and the other weaker economies of Europe artificially raised market willingness to lend them money and lowered the interest rate they would pay. At the same time, the euro also lowered the cost of goods from Germany by eliminating the market arbitrage of currencies.

I know this may sound complicated, but we can grasp the core dynamics using household analogies.

The willingness of lenders to lend and the rate of interest they charge is based on economic fundamentals: the balance sheet of assets and liabilities, and cash flow: how much income goes to pay liabilities and how much is left over as surplus to spend or invest.

Households and nations with weak balance sheets (i.e. liabilities exceed assets) and weak cash flow balances (i.e. much of the nation's income is already committed to entitlements and liabilities, so relatively little is left to fund future borrowing) will find it difficult to borrow a lot, and the rate of interest they will pay will be high.

Nations have another mechanism to differentiate between strong and weak balance sheets: national currencies. Countries with weak cash flow and risky balance sheets will have weak currencies, as people price the risk into the currency.

In effect, Greece was like the poorer brother who suddenly got the wealthier sibling's credit card. In this sense, the euro was a scam, because it stripped the market of the pricing mechanism that we call currencies. By pricing all money the same regardless of national balance sheets and cash flows, then weaker countries got the credit card of their stronger brethren.

Predictably, these nations over-borrowed. When presented with the opportunity to borrow huge sums at low rates of interest, it is "rational" to accept the opportunity.

Who benefited from this elimination of market pricing via currencies? Germany and the banks. In pre-euro days, it took a lot of Greek drachmas to buy expensive goods from Germany. After the euro was introduced, German goods became cheaper in terms of hours worked and interest rates paid.

German exports to the rest of Europe have been strong, and these exports within Europe are the backbone of the German economy. (Exports are roughly 40% of the German economy, the highest in the world for major economies. Exports make up about 10% to 15% of the economies of Japan and the U.S.)

The pool of apparently creditworthy borrowers expanded greatly, and the banks promptly began lending vast sums to both the public and private sectors of these fundamentally weaker nations.

You can't fool Mother Nature with artificial games for long, and now reality has trumped artifice: the nations with weak balance sheets and cash flows cannot support the monumental debts they acquired during the decade of the euro-scam.

If you eliminate the market's ability to price risk and credit, the market breaks down. That is the eurozone in a nutshell.

The no-win situation is clear: if it wants to continue using the euro, Greece must pay its debt and interest in euros. Its economy simply isn't large enough or productive enough to do this, so that's simply not possible. Wishing it were possible doesn't make it possible.

As a result, the weaker, over-indebted nations are in death-spirals of higher taxes and higher debt servicing costs. Each bleeds vitality and trust from the economy, driving it deeper into fatal contraction.

These nations are also in political death spirals. I spoke at length with a well-informed young Greek friend who has lived in both Germany and the U.S., so he is well-acquainted with the perspectives of Germans and Americans.

He reports that the Greek people are profoundly divided on the question of whether to stay in the eurozone or risk leaving it. He said that even within the various political parties, there are two camps. In his opinion, the odds of either camp surrendering their deeply held beliefs and fears is very very low. Those who want to stay in the euro are terrified that a return to the drachma would wipe out the nation's savings and further reduce the already diminished incomes of households: in effect, the middle class would be wiped out.

Others see a deeply sinister master plan in all this: pushing Greece back to the drachma would immediately render the nation poorer and make its assets very cheap to foreign Elites, who would rush in and snap up Greek assets at fire-sale prices. Greeks would lose their country.

This is indeed part of the dynamic when nations radically devalue their currency: if a villa in Greece was 300,000 euros before the return to the drachma, it might be only 100,000 euros when the drachma is re-instated. Priced in euros, the whole of Greece would "go on sale".

I hope you can see that there are two parallel no-win situations here, a financial one and a political one. This is the Kobayashi Maru scenario on a national scale, and there is no exit if you stay within the rules of the game: euro or drachma, etc.

Here's my "crazy idea that's so crazy it might just work": Greece should switch to the U.S. dollar as its currency while renouncing all debt denominated in euros. I don't mean a "haircut," I mean billiard-ball bald: 100% of all debt denominated in euros would be renounced. Not one euro will be repaid.

The reason is that the banks (lenders) knew darn well that Greece remained a weak economy, and eliminating the currency arbitrage by accepting the euro did not magically strengthen Greece's financial fundamentals. It was all a scam that the banks exploited, including the European Central Bank, and so they will have to accept the losses now that the scam has collapsed.

Nobody put a gun to the head of lenders who fronted Greece stupendous sums of money at low rates of interest. It was their gamble and they lost. End of story.

Whatever else you can say about the U.S. dollar, it retains global trust as a medium of exchange and a transparent store of value. Your $100 bill is good in Laos, Bolivia, Russia, China and everywhere else. Its value fluctuates because the market is free to set the risk of holding dollars.

Ultimately, all fiat currencies are simply physical measures of trust. People know the U.S. has plentiful problems of its own, but they also know the problems are well-known and transparent to all, so the market can price risk in the dollar. They also know the U.S. isn't going away tomorrow, and that there are enough dollars floating around the globe that there will always be someone who will accept the dollars in trade for tangible goods at a transparent price.

The problem with returning to the drachma is the risk of the transfer is unknown, and so the risk will be transferred to the drachma. By making the process into two steps--exit euro for the dollar, then later, exit the dollar for the drachma--much of the risk and distrust is removed from the initial step of exiting the euro.

Here's the beauty of Greece accepting the dollar: since Greece cannot print dollars, then everyone will know the currency cannot be depreciated by the Greek state. If Greece can print drachmas in unlimited quantities, then the drachma will quickly lose whatever value it begins with. In contrast, regardless of the policies of the state or central bank of Greece, the dollar will still have the same value day to day.

All euros in accounts would convert to dollars.

This will immediately restore trust and trade, both domestically and internationally, as everyone will know the U.S. dollar will retain its value everywhere.

Does Greece need U.S. approval to take the dollar as its interim currency? No--the dollar is ubiquitous and in sufficient quantity that there are enough physical dollars floating around the world to serve as the currency for a small nation such as Greece. It would help if the U.S. accepted Greece's choice, but American acceptance would be optional.

The third critical step in my plan is that Greece must reach a political consensus on taxation and governance. Everyone knows that tax avoidance has undermined the Greek state's finances, and the people of a democracy have to reach a consensus themselves: it cannot be imposed by bureaucrats from afar.

Greece desperately needs a visionary politician to emerge who can clearly state Greece's choices in taxation and governance: the State needs enough income to do what the people want it to do, and so everyone is going to have to pay taxes. Those who evade will have to be shunned/coerced by public opinion into compliance, for the national good. The institutions of taxation will have to restore trust in their fairness and transparency.

Greece must have a transparent national dialog on taxation and governance, and reach a consensus via the democratic process. Without this step, then it won't matter what currency Greece uses, it will slip further into a death-spiral of dysfunction.

So here is the 3-point plan:

1. Renounce all debts denominated in the euro, i.e. a 100% writedown.

2. Accept the U.S. dollar as the national currency of Greece.

3. Engage in a transparent national dialog and reach a consensus about taxation and the role of the state in the Greek society and economy.

We might add a fourth point: renounce scams and kicking problems down the road rather than addressing them directly, sweeping dysfunction under the rug, etc.

There is a compelling internal logic to my crazy plan: when trust in national currencies and institutions is lost, then the black market becomes the trustworthy place to engage in trade. The world's favorite black market currency is of course the U.S. dollar. In this sense, for Greece to officially accept the U.S. dollar as its currency is simply a recognition of the natural progression from a currency that is no longer viable to one that is.


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Sun, 05/13/2012 - 15:05 | 2421683 GreekGod
GreekGod's picture

Both the dollar and the euro are too strong for Greece.

Sun, 05/13/2012 - 15:20 | 2421724 AbelCatalyst
AbelCatalyst's picture

GreekGod is right - the whole point is to get to a super weak currency so tourists will flock to Greece next summer (after the initial shock). The US dollar will leave them right where they are now. They need to be able to manage their own currency, which is why they are where they are.

This idea simply swaps out Germany and puts the US in the same spot.

Sun, 05/13/2012 - 15:22 | 2421731 The Big Ching-aso
The Big Ching-aso's picture




Greece doesn't have enough oil unless we run convert our cars to olive oil.  Let that thought simmer.

Sun, 05/13/2012 - 15:38 | 2421758 idea_hamster
idea_hamster's picture

It's not a question of the strength or weakness of the currency.  It's a question of who controls the decision to inflate/print/devalue.  That is the same reason that it makes no sense for Iceland to adopt the Looney.

Greece's problem is that its government needs a method of taxing the public that is subtle/insidious/difficult to avoid, in part because no one actually pays taxes through the normal channels.  Once they adopted the Euro, they gave up this ability -- which worked fine for a while when every was on the no-default-in-the-eurozone honeymoon.  Now, the honeymoon is over, and the debt-ridden chlamydia has to be treated.

Greece needs its own currency -- that will give it the taxing power it needs.  The fact that they blew up their international credibility before they launch this new currency will make the transition more painful.

But as long as they don't have their own currency, they will always/always/always default on their debt.  Adopting the USD is not a solution.  If they wanted to pick another currency, they should pick the Brazialian rial -- that inflation rate will help more.

Sun, 05/13/2012 - 15:44 | 2421788 Marginal Call
Marginal Call's picture

Or they could just peg the drachma to the dollar and manipulate ala China.  Devalue at will.


It's not like they don't have their own printers over there, and they'd avoid the trouble of having to actually acquire and distribute actual dollars. 

Mon, 05/14/2012 - 03:08 | 2422863 Oh regional Indian
Oh regional Indian's picture

Unbelievably Dumb idea.

At this point in history especially. Like Greece joining will save the dollar perhaps, eh?

For effect, let me repeat: What A Dumb Cluckin' idea. A Drachma/Dollar peg I can understand, see how that ended up for Argentina though. Or China now.

Did I say this was a dumb-cluckin' idea. It's a dumb-cluckin' idea.



Sun, 05/13/2012 - 15:57 | 2421823 bank guy in Brussels
bank guy in Brussels's picture

This self-confessed 'crazy idea' article says above:

« ... U.S. dollar, it retains global trust as a medium of exchange and a transparent store of value ... »

Ha! - What amazing Tim Geithner bullsh*t to appear in a ZeroHedge article.

Crazy idea indeed.

For one thing, many Greeks have a traditional HATRED of the American government for all its CIA operations there, like with the right-wing military junta under which they suffered a few years back.

The frackin' US dollar is the LAST currency they would want.

And nothing to stop the Greeks from accepting and using whatever currency they like ...Heck, right now in Europe, there are several countries that 'borrow' the euro, while not in the eurozone ... And sometimes it's the only main currency (Andorra, Monaco, San Marino ...)

Plus, as other people are pointing out on this thread,  'dollarised' countries can put themselves in a difficult trap, unable to control their own destiny, or even to make their exports and tourism cheap enough.

This is Goofy ZH article of the day.

Sun, 05/13/2012 - 17:03 | 2421999 Pure Evil
Pure Evil's picture

So, would that make Greece the 58th, 59th, or 60th state.

I always thought we bombed the hell out of a sovereign country before we turned them into new states, ala Iraq and Afghanistan.

Better hurry before we make Libya the next state, we've already bombed the hell out of them and Syria and Iran are on our shit list.

Sun, 05/13/2012 - 20:22 | 2422396 Normalcy Bias
Normalcy Bias's picture

Give it time, man. Al Qaeda is EVERYWHERE.


Mon, 05/14/2012 - 00:16 | 2422753 Real Money Wins
Real Money Wins's picture

Seems a bit ridiculous for Greece to go to the dollar. The US Government is making plans for the eventual collapse of the dollar, so why trade one bad currency for another. Let the Greeks print Drachma's, but use their brains and limit the supply of ink and paper. A shortage of cash in Greece works far better than any austerity would and forces both civil population and the government to adjust budgets appropriately and eventually(not overnight) strengthen the economy buy letting supply and demand rule the day. And this is because credit would not be available except at high rates which would not be appealing and would mean if you don't have the money you can't buy it unless you save up cash in order to purchase it. Of course in the short term you would have a great deal of bartering going on but this is the type of environment where inventiveness and new business out of necessity spring into existence and eventually leads to a healthy economy. And of course the government would have to get smaller and streamlined out of necessity due to lack of massive tax revenues and begin working within a realistic budget. A hard pill to swallow for sure but far better than never ending poverty.

Sun, 05/13/2012 - 23:04 | 2422587 monkeyboy
monkeyboy's picture

I didn't even understand that article, but I knew it was CRAZY TALK straight away!

Mon, 05/14/2012 - 00:05 | 2422745 StychoKiller
StychoKiller's picture


Those who evade will have to be shunned/coerced by public opinion into compliance, for the national good.  The institutions of taxation will have to restore trust in their fairness and transparency. [/quote]


The National good??  Bwahahahahaha!

Mon, 05/14/2012 - 05:17 | 2422958 RECISION
RECISION's picture

... and further to that.

Greece must have a transparent national dialog on taxation and governance, and reach a consensus via the democratic process. 

If they could have - they would have. 

IF... they had a unicorn that shits candy we could all live happily ever after...

Not going to happen.

And since neither exists, then I guess we are left with dealing with the realm of the actually possible, in the current reality.

A 'death spiral of dysfunction' isn't some sort of aberration - it is the direct result of existential interests and dichotomies. It is actually a measure of our civility that people aren't fighting and dying over these issues already.

Don't know how long that will last tho...

Sun, 05/13/2012 - 15:51 | 2421781 sunaJ
sunaJ's picture

Yes, let's assume everything fell into place for that to happen. Since we know setting a precedent of the bailout, which has extended and deepened this crisis to this date, worked so well.  I'm sure Spain or anyone else would never consider they didn't have to really reform because if it gets too bad, there's always the U.S. dollar.


Also, to the author: You know that any solution to intractable worldwide debt sold as assets and hyper-re-hypothecated without a complete reformation of the underlying legal and monetary structure must include at least three unicorns.  I don't see any unicorns.

Sun, 05/13/2012 - 15:28 | 2421753 Piranhanoia
Piranhanoia's picture

Greece would only set prices, not value of the dollar.  It could work and diminish the down time.

Mon, 05/14/2012 - 08:02 | 2423114 monkeyshine
monkeyshine's picture

GreekGd is right and so is the OP though. A massive devaluation of Greek currency would wipe out the middle class. The 300,000 home is now worth 100,000 as the OP tries to point out. Tis gus all savings and equity I'm nt s sure foreign investment at lower prices will be a and thing 1'years hence bt it will be painful for years. Tourism won't save Greece I give the O credit for thinking outside the box but see the plan crumbling at part 3 if it even get past 2. Politics will make 2 possible with Germany and France and UK
pushing n the strongest terms fr the US to stay out. Yes Greece can do it on its own and yes this would be a black market currency - in the 1980s it was very common for American Tourists to exhange currency on the street with black marketeers fering better than bank rates. I know I did it often. But Greece cannot get past the tax issue. They don't collect taxes well. They need a way to inflate as a form of tax. Slowly ease their way out of it is the probable solution - expedient anyway. national dialogue won't accomplish much in this post nationalist Euroean era.

Sun, 05/13/2012 - 15:21 | 2421728 knukles
knukles's picture

Who thought up that abortion?
Same fundamental problem as the Euro.
Guy must not read ZH (giggle giggle snort snort)

Sun, 05/13/2012 - 15:23 | 2421733 The Big Ching-aso
The Big Ching-aso's picture



This idea could work if they had collateral other than rioting.

Sun, 05/13/2012 - 15:29 | 2421756 Marginal Call
Marginal Call's picture

But if they figured out a way to export it, they'd have gold.  "Let the Greeks act out your societal angst"  "Save your cities, burn ours"


And perhaps a riot-cation from the new touriot industry.  "Come tour the ruins, ruin them some more"

Sun, 05/13/2012 - 15:32 | 2421761 knukles
knukles's picture

How'd that work out for selected Afrian-Americans some time ago?

Sun, 05/13/2012 - 15:43 | 2421765 The Big Ching-aso
The Big Ching-aso's picture



The Greeks deserve a second chance on someone else's dime besides the U.S.'s.   We got R own problems with our dimes turning into pennies.  And btw Chuck, a buck ain't a buck anymore either.

Sun, 05/13/2012 - 15:51 | 2421801 resurger
resurger's picture

The USD Black Market business is great, it's priced in USD ONLY!!! lol

Somalia Quotes

Sun, 05/13/2012 - 15:52 | 2421809 Marginal Call
Marginal Call's picture

I did a LOL over the "illegal fishing" one.  They are lawless, yet somehow it's illegal for them to fish.

Sun, 05/13/2012 - 16:03 | 2421828 EscapeKey
EscapeKey's picture

The strength of the currency matters little, what matters is the government's ability to run a sustainable budget.

Dollarization and currency boards aren't new concepts. Argentina, for instance, introduced a currency board in the wake of their 1989 hyperinflation. Sadly, it didn't take long before they were back to running deficits, and general nervousness in the market - not helped by the LTCM collapse as well as the Russian default - led to the ultimate collapse in 2001.

This is a very good book on the topic:

Sun, 05/13/2012 - 16:22 | 2421883 emersonreturn
emersonreturn's picture

why not gold or yuan?

Sun, 05/13/2012 - 20:39 | 2422421 Drachma
Drachma's picture

I suggest the DRUNKMA, 100% backed by Ouzo. The future of Greece -   Fixed-rate alcoholism. Opa!

Sun, 05/13/2012 - 15:05 | 2421687 SilverTree
Sun, 05/13/2012 - 15:05 | 2421688 Vegetius
Vegetius's picture

This Summers blockbuster Movie;

Totally Alien     (to anyone with sense)

Scene 102; the team retreat from the Euro bunker in a desperate attempt to excape their DOOM!


Merkel: By the skillful and sustained use of propaganda, one can make a people see even heaven as hell or an extremely wretched life as paradise.

Draghi: We must Print! Print! Print!

Herman van Rompey: No Mario! We must continue to pull paper bags over our heads.

Newt: We'd better get back, 'cause it'll be dark soon, and the Pirates mostly come at night... mostly.

Jose Manuel Barroso: We must protect my paycheck and pension, we must do as Draghi suggests

New Guy rushes up to the team ---

Herman van Rompey: Who the hell are you!

Hollande: I am the new commander of the West Front. I have made a lot of promises and the Great Leader better deliver or we are kaput.

Merkel: How fortunate for governments that the people they administer don't think, especially yours Hollande.

Herman van Rompey: How long after we're declared Greece a non-Euro area can we expect an American rescue? I am running out of paper bags.
Hicks: [pause] Seventeen days.
Hudson: Seventeen *days?* Hey man, I don't wanna rain on your parade, but we're not gonna last seventeen *hours!* Those PIIGS are gonna come in here just like they did before. And they're gonna come in here...

Merkel: Hudson!
Hudson: ...and they're gonna come in here AND THEY'RE GONNA WANT MORE MONEY FROM US!
Hollande: Hudson! Pull yourself together, I have promised all sorts of crazy shit, and I won the Election! Look, this is an emotional moment for all of us, okay? I know that. But, let's not make snap judgments, please.

Hudson: Hey, any of you ever been mistaken for a man?
Jose Manuel Barroso: Us No. Have you?

North Rhein-Westphalia Election Results--------------

Draghi: Stand by to initiate Printing. On my mark. Five. Four.
Hudson: We're on an express elevator to hell; going down!

Mon, 05/14/2012 - 05:22 | 2422962 RECISION
RECISION's picture

Art.  :-)

Sun, 05/13/2012 - 15:09 | 2421694 infiniti
infiniti's picture

Why don't they just renounce all Euro-based debts and stay on the Euro. Switching to Bernanke bucks seems to be an unnecessary action. EUR and USD are pretty much the same thing.

Sun, 05/13/2012 - 15:42 | 2421785 CrashisOptimistic
CrashisOptimistic's picture

Because way too many articles posted here are not sophisticated.

A renounced array of Euro debt means what?  Does the debt go away?  No.  The creditor decides if it goes away, not the debtor.

So renouncing Euro debt means NOTHING.  If the EU wanted to, they could orchestrate a surcharge on every barrel of oil Greece imports.

They will get paid.

Sun, 05/13/2012 - 18:15 | 2422195 Bag Of Meat
Bag Of Meat's picture


Sun, 05/13/2012 - 15:10 | 2421701 LukeWorm
LukeWorm's picture

Good plan, but it will take one or two generations for the Greek people to learn that paying taxes is something normal that everyone does.

Sun, 05/13/2012 - 15:12 | 2421705 Joebloinvestor
Joebloinvestor's picture

Greece is a charity case.

Any form of specimen loaned to them is gonna end up a give away.

They will never get their act together until they correct the tax collecting (fat chance of that).

Will require a complete re-thinking of the public sector jobs.

Not in my lifetime I am afraid.

Sun, 05/13/2012 - 15:15 | 2421709 bugs_
bugs_'s picture

We'll get to 57 states yet!

Federal Reserve Bank of Athens

Sun, 05/13/2012 - 15:20 | 2421729 GeneMarchbanks
GeneMarchbanks's picture

Truly. I don't get this humor though, it seems tasteless.

Having Biden show up in a cow-boy hat and American flag pants throwing FRNs at the masses screaming "Welcome to our union, congratualtions you're our 51st" isn't even absurd enough to somehow incite a chuckle. Maybe it's too close to the truth.

Sun, 05/13/2012 - 16:41 | 2421944 Elwood P Suggins
Elwood P Suggins's picture

Well Biden's all for gay marriage so he'd really enjoy himself in Greece.

Sun, 05/13/2012 - 15:22 | 2421732 Money 4 Nothing
Money 4 Nothing's picture

Then Spain, Portugal, etc.. Let's adopt all the wayward bound derelect Nations. Why not? It improves the image of the USA.

Sun, 05/13/2012 - 15:28 | 2421739 The Big Ching-aso
The Big Ching-aso's picture



Greek dollars.   This is kinda like Greek is to real work is to production is to bullshit.

Sun, 05/13/2012 - 15:28 | 2421740 The Big Ching-aso
The Big Ching-aso's picture



Great.  Greek adapts dollar.   Just what the U.S.A. needs.   More people adapting to welfare.

Sun, 05/13/2012 - 15:36 | 2421768 machineh
machineh's picture

And more bases in all the new states!

Daddy Warbucks on a roll, bItcHEz!

Sun, 05/13/2012 - 16:46 | 2421955 DosZap
DosZap's picture

We'll get to 57 states yet!

Federal Reserve Bank of Athens


Whats wrong with you?, our leader already has HIS 57 picked out.

Sun, 05/13/2012 - 15:14 | 2421711 QuickDraw007
QuickDraw007's picture

Market Trends, Gold, Silver, Currency Swaps and QE3

Although this topic may have the charismatic brilliance of grandmas false teeth, it likely may be the most significant piece of financial news of the past several months to hit news wires. It is important to follow these market trends to understand the market we are trading in. On November 30th 2011, the Federal Reserve, along with the Euro Central Bank, and the central banks of Canada, Switzerland, Japan and the U.K. all slashed U.S. Dollar swap rates by nearly half (1.08 percent down to 0.58 percent) to borrow U.S. Dollars to ease the Euro Debt Crisis.

Read the rest of the article here:

Sun, 05/13/2012 - 15:17 | 2421712 falak pema
falak pema's picture

ha, ha, ha, Pax americana wants a new client !!! After Afghanistan and Paki, bankrupt Greece. Anything to make the Empire more efficient. Krugmanomics is alive! 

Sun, 05/13/2012 - 16:11 | 2421860 smb12321
smb12321's picture

Despite the hysteria on ZH, the dollar will most likely be the last fiat currency standing for obvious reasons - its universal use and acceptance.  Yes, the FED is debasing it as fast as possible but it is still the haven of choice.  Greece needs, above all, a rebalancing of its private-public sectors and an acceptable currency.  (I prefer the drachma simply because of its relative cheapness and ensuing tourist trade.) 

Sun, 05/13/2012 - 18:58 | 2421943 falak pema
falak pema's picture

No question; US runs the world since 1945 and the petrodollar montage has the arabs by the nuts and Chindia by their hungry jowls, as they eye the uber-alles nuke protrudence like a spiking hard-on of an unpredictable GORILLA  in the world's china store. Talk about the coming 'Scream'....million dollar hubristic dream. Before the US loses its crown jewels it still has time; unless the happy few in their unstoppable greed bring down the whole shooting match from inside. A nymphomaniacal banker is a redoubtable animal. Go see Antonioni's masterpiece "LA Notte"...

Sun, 05/13/2012 - 15:19 | 2421719 Money 4 Nothing
Money 4 Nothing's picture

Both Countries are equally fucked so that just may work.

Sun, 05/13/2012 - 15:19 | 2421726 Bunga Bunga
Bunga Bunga's picture

Let the U.S. taxpayer clean up the mess.

Sun, 05/13/2012 - 15:25 | 2421741 ZeroPoint
ZeroPoint's picture

So we can add 10 million more people to the food stamp roles?


Sun, 05/13/2012 - 15:42 | 2421784 Beam Me Up Scotty
Beam Me Up Scotty's picture

Thats exactly what I was thinking.  Lets add some more fat assed malcontents to our welfare system.  Simple fact is, you can't work for 30 years of your life, and live to be 80 years old, and have enough money spread out over all those years to TAKE CARE OF YOURSELF!!  You can't retire at age 58 or whatever stupid age they think they can retire at.  Someone HAS to foot the bill.  Screw the social safety net.   Its nothing but a boat anchor for the productive people and the smart people who don't get in over their heads in debt their whole lives. 

Sun, 05/13/2012 - 16:19 | 2421875 smb12321
smb12321's picture

When we married, my wife and I decided to live as if there would be no pension, Social Security or inheritance.  We will get all three (if SS and pension are still around) but we also saved on the side. Many Japanese companies allow the worker to automatically contribute 10-30% of their check to an individual savings account (NOT public).

Very soon, SS will become simply another form of welfare, means tested until those with any wealth accumulated over a lifetime of work get nada.  Alas, SS is digressive - the more you put into the system matters very little in the end. 

Sun, 05/13/2012 - 16:49 | 2421958 ZeroPoint
ZeroPoint's picture

I wouldn't mind paying if there was a madate to implant birth control in anyone on government assistance for more than 1 year. It's easily removed and very few complications. If people get back on their feet, they can have it removed. We have to end the cycle of dependence. If we don't, the whole system will be wiped out.





Mon, 05/14/2012 - 12:58 | 2422470 DosZap
DosZap's picture

O.T., but nowhere to put it.........................

And we wonder why we are screwed?.

Makes me want to do the same thing..............almost.

Be sure your sitting, its 6 minutes long.And have bung fodder ready.

Pay special attention to what has been the response from the BIG dogs in D.C. mp;autoStart=true

Mon, 05/14/2012 - 03:10 | 2422866 New World Chaos
New World Chaos's picture

Dats rayciss!

Better yet, you could offer a $500 payment to anyone who gets the implant.  Drug addiction would diminish over a few generations.  It's a great idea (especially if applied to the needy rich) but it will never happen because the elites are trying to domesticate us by breeding out our dangerous traits.  Mainly intelligence, independence and honor.  There also needs to be a permanent underclass to keep the middle class loving the police state and fearing systemic collapse.

Sun, 05/13/2012 - 15:26 | 2421744 Dr. Gonzo
Dr. Gonzo's picture

Stupid plan. The smart thing would be to go on a gold and silver standard after they renounce the Euro.  They would think they get the last laugh investing in a US dollar currency then Karma would bite them in the ass sooner or later when the dollar goes tits up. Anyways they could get oil from Iran for gold...Gold is the future. 

Sun, 05/13/2012 - 16:09 | 2421852 ThirdWorldDude
ThirdWorldDude's picture

Unfortunately, Greece doesn't have any goldmines and their reserves are deteriorated:


On a second thought, I don't think they'll get to see that shiny yellow thing again, because it simply isn't stored in Greece and will be used as collateral by BIS.

Sun, 05/13/2012 - 21:32 | 2422417 nicxios
nicxios's picture

Greece has goldmines.  

3 mines that are near operation have the capacity to produce 500.000 ounces of gold per year. Furthermore, “Greece has the potential to become a serious gold producer, but more exploration needs to be done – very little has happened over the past 20 years,” Mr Wright said.  

Are we going to continue believing the mass media lies that Greece has nothing of value but olive oil?!  There's a reason why countries north of Greece have wanted and still want a piece of northern Greece. There's a reason why Turkey eyes Thrace and the Aegean. It ain't for the Greek salads!

If we could just hang the politicians, GOLD BACKED DRACHMA BITCHEZ! 


Mon, 05/14/2012 - 07:41 | 2423069 Reptil
Reptil's picture

Southern Europe has a lot of resources that may prove valuable in the post collapse world.
Thank you for the link.

Sun, 05/13/2012 - 15:27 | 2421746 lolmao500
lolmao500's picture

Greece would be in better financial shape than the US...

Sun, 05/13/2012 - 15:29 | 2421747 MeanReversion
MeanReversion's picture

What an idiotic idea.  This is mental masturbation at its finest.  The fundamental problem with Greece aside from their debt load is that they can't control their own monetary policy.  So the proposed solution is to adopt a stronger currency and cede its monetary policy to the Federal Reserve/U.S. Treasury and simultaneously be at the whim of this ridiculous Congress who inevitably makes stupid decisions that often impact said monetary policy?  Complete non-sequitur.  They may suffer for a long period under a new Drachma, but when its all said and done, the weak Drachma may prove a boon to Greece if they can make a compelling case to corporations to say, move their operations from Gemany to Greece, as well as drawing travellers from all across the continent.  Whichever path Greece takes there is going to be pain, and a lot of pain...

Sun, 05/13/2012 - 16:44 | 2421951 Elwood P Suggins
Elwood P Suggins's picture

Then they'd fit right in with the US Gov't, Californicate, Illinois, New Jersey, New York etc.  A perfect fit in fact.

Sun, 05/13/2012 - 15:28 | 2421749 mc_LDN
mc_LDN's picture

Pinning the Greek flag to the US mast of soon to be sinking currency ship is like jumping out of the frying pan into the fire.

There's more in it for the US and its failed bankers' capitalism than Greece.

Sure the EU is even more poked but one has to start wonder at what point states are going to come up for air and go - why do we keep throwing our lot in with these bigger powers that cede control outside our own borders?

More localism please... The Globalist project is a proven failure.

Sun, 05/13/2012 - 15:43 | 2421789 CrashisOptimistic
CrashisOptimistic's picture

There are non US territories that use the US dollar.

There is precedent for this.

Sun, 05/13/2012 - 17:37 | 2422095 Salah
Salah's picture

Dollarized countries:  Panama (historic basis), El Salvador, Dominican Republic, Timor-Leste, Cambodia (default--get 'em in ATM), Vietnam (default--get 'em in ATM), Ecuador (voted their Peso off the island in 1999)

Reason for most: untrustworthy politicians who debased their own economies

Best Reason for US FedRes:  1. highly profitable for seigniorage, 2. Greece using dollars would act to "soak up" all free, 'unsterilized' dollars floating around--better than higher oil prices


Sun, 05/13/2012 - 15:28 | 2421751 Peter Pan
Peter Pan's picture

I cannot believe this proposal is given any space or consideration.

Fiat currency has been the source of the problem so how can it be the solution?

What Greeks need is a silver coin like they had up to the early sixties, so that when the SHTF they can still transact on a daily basis knwing full well that their money has and will continue to have value.

Sun, 05/13/2012 - 15:27 | 2421752 phat ho
phat ho's picture

Was surprised when I arrived in Ecuador that they use US dollars. Any other countries out there that do as well? Might as well add Greece.....

Sun, 05/13/2012 - 15:42 | 2421783 THX 1178
THX 1178's picture


Sun, 05/13/2012 - 15:29 | 2421755 TWSceptic
TWSceptic's picture

Out of the frying pan and into the fire.

Sun, 05/13/2012 - 15:32 | 2421763 Money 4 Nothing
Money 4 Nothing's picture

I agree, but what your failing to recognise is that we printed enough for 2 Nations at this point so may as well spread the wealth around.


/sarc.. big time but half true.

Sun, 05/13/2012 - 15:32 | 2421762 phat ho
phat ho's picture

The biggest economies to have officially dollarized as of June 2002 are Panama (since 1904), Ecuador (since 2000), and El Salvador (since 2001)


Dollarization From Wikipedia, the free encyclopedia
Sun, 05/13/2012 - 15:36 | 2421769 Negro Primero
Negro Primero's picture

...much better this dollar:

Sun, 05/13/2012 - 15:36 | 2421773 phat ho
phat ho's picture

When they add Greece then it will spell...... P E E G

Sun, 05/13/2012 - 15:37 | 2421774 Landrew
Landrew's picture

So many levels this is dumb! Greece can not print Euros either! Were are the dollars? Can I have the time back I used reading this crap!

Sun, 05/13/2012 - 16:12 | 2421858 junkyardjack
junkyardjack's picture

I didn't even bother, the idea was so stupid I just wanted to see whether anyone in the comments was dumb enough to agree with it.

Sun, 05/13/2012 - 15:45 | 2421792 I am Jobe
I am Jobe's picture

BlackRock CEO Fink Says He Supports Obama’s Re-Election (Update 2)


Mon, 05/14/2012 - 02:11 | 2422828 TNTARG
TNTARG's picture

It's a fucking nigthmare, guys. Something more radical it's needed.

Sun, 05/13/2012 - 15:55 | 2421816 Chartist
Chartist's picture

Greece needs to find a way to raise their GDP.  If all they've got are tourism and olives, then a strong currency is not going to help them. 

*  They need to leave the EU.

* Go back to the drachma which will be decimated promoting a cheap tourism destination.

* Get damn serious about tax collections.

Sun, 05/13/2012 - 18:25 | 2422207 Bag Of Meat
Bag Of Meat's picture

People need to understand that EVERY problem in the greek economy is related to one group : The corrupt politician-bankster-corp complex, defrauding the greek people in every possible way. After having stolen everything , they invest a tiny percentage to assure their coalition and they keep on going. THAT's what they need to change..

Sun, 05/13/2012 - 16:05 | 2421841 savagegoose
savagegoose's picture

hey it avoids printing another failed  peice of paper like the zimbabwe 100 trill note. The usd is default  money in any country without a functioning money system

Sun, 05/13/2012 - 18:10 | 2422187 Stuck on Zero
Stuck on Zero's picture

Zimbabwe learned its lesson.  There is no Zimbabwe currency now.  People just trade whatever currency they want to use.  Smart phones allow conversions in seconds.  Greece could forgo a currency likewise.  Dollars, Euros, pesettas, Renminbi, gold, silver, or whatever would all be accepted. 

Mon, 05/14/2012 - 05:37 | 2422966 RECISION
RECISION's picture

Smartest comment on this whole thread.

The utility of a "national"(unified) currency is in the day to day convenience to the people - and from the benefits of manipulation to the elite.

But, essential it is not.

Mon, 05/14/2012 - 05:53 | 2422978 Ghordius
Ghordius's picture

correct, the main utility of a national currency is on the government's side, mainly in the collection of taxes and the issuance of debt

the additional main utility of a fiat national currency is that a nation can go to war without saving for a "war chest" first

in the Middle Ages, the right of minting gold and other coins (and therefore applying a nominal worth on top of an "intrinsic" value - a "first off" debasing) was called Seigniorage - literally, "the right of a Sovereign Prince" - even wikipedia calls it a "convenient sort of revenue for (LOL) some (LOL) governments"

Zimbabwe did not learn the lesson at all, IMO, they are just stuck in a credibility gap. They are in talks with the Chinese about using their's.

Sun, 05/13/2012 - 16:16 | 2421864 magpie
magpie's picture

And these kind of ideas are floated after that great transatlantic arm of American banking, JPM is being hacked off...oh wait, there still another tentacle called GS.

Sun, 05/13/2012 - 16:17 | 2421869 wee-weed up
wee-weed up's picture

Why don't all countries do this to try to "piss away" their financial problems?

Dumbest thing I ever heard. Next!

Sun, 05/13/2012 - 16:18 | 2421871 bankruptcylawyer
bankruptcylawyer's picture

This idea is awesome......only youre going to have a full war on your hands. But after tge war greece would come out on top.

Sun, 05/13/2012 - 16:22 | 2421882 mnzcme
mnzcme's picture

4th part of plan.  Let people of Greek descent (perhaps 1 grandparent) living outside of Greece buy Greek citizenship for $6000, WITHOUT the requirement of national service.  Allow these poeple to start businesses within Greece at low taxation levels.  This will draw capital to the country and provide for a transition from government employment to private employment.  However, this idea absolutely depends on dropping the euro and on low taxes.  There are Greeks all over the world.  Let them save their home country, not by being bound to contractual agreements from the eurozone that they had nothing to do with, but by GROWING the country through private enterprise and low taxes.

Mon, 05/14/2012 - 05:39 | 2422970 RECISION
RECISION's picture

What, something like... Ireland.

Gee, that worked out well.

Sun, 05/13/2012 - 16:22 | 2421886 halfacanuck
halfacanuck's picture

Very good. But even simpler would be to peg EUR to USD at, say, parity. Greece and Spain get a devaluation (as does all of Europe), their debt load reduces, and Europe's export markets become competitive again. The Greeks might have the chance to actually work their way out of this.

Interesting that the G8 summit next weekend was moved from Chicago to Camp David at such short notice...

Sun, 05/13/2012 - 16:32 | 2421913 Paul Atreides
Paul Atreides's picture

What a great expose the banker/government trolls. Anyone who believes or puts weight behind this nonsense is either a complete moron or works for TPTB.

Sun, 05/13/2012 - 16:41 | 2421936 americanspirit
americanspirit's picture

Re: moving the G-8 to a more secure location. It won't be long before anyone who is a political or business 'leader' will, for good reasons, be afraid to appear in public and that can't happen too soon to suit me.

Sun, 05/13/2012 - 16:43 | 2421949 pcrs
pcrs's picture

Since when was government anything else than kicking the can down the road and scamming people. That's all it is. They are people with a monpoly on violence, that IS what they do, the rest is for public consumption.

Mon, 05/14/2012 - 05:43 | 2422971 RECISION
RECISION's picture


Sun, 05/13/2012 - 16:53 | 2421970 blunderdog
blunderdog's picture

I like the fact that there's a clear idea proposed, but it's completely silly and impossible.  It's a lot like saying, "It's easy to fix racism in the USA, the whites and blacks just have to treat each other equally."

1) There aren't currently enough US dollars in Greece to replace the current Euo accounts
2) The Greek government can't print dollars, and the Greek banking system can't borrow from the Fed

In other words: there's no way to transition from the current system to one in which everyone suddenly wakes up with a pocketful of dollars.

Given that the 3rd critical requirement is the one that is politically impossible, it doesn't even matter if there really were enough dollars in Greece to start using them as currency: government revenue vs. spending has be to netzero BEFORE you switch to a currency that the government can't manipulate.

Sun, 05/13/2012 - 17:08 | 2422009 magpie
magpie's picture

Uh, no.

Just think of Greece as a giant MBS. Better yet, just think of the USA as a MBS.

Rated AAA of course.

Sun, 05/13/2012 - 20:31 | 2422413 blunderdog
blunderdog's picture

How is that supposed to help?  I can think of Greece and the USA as barrels of monkeys, too, but there's no bearing on the article.

Mon, 05/14/2012 - 11:22 | 2423764 magpie
magpie's picture

Sorry, too much champagne last night and a vintage black helicopter moment this morning; not really sure which thread or even forum i was posting on.

The Oberredakteuse must be highly irritated by last week's stunt... 


Sun, 05/13/2012 - 17:03 | 2421996 markar
markar's picture

Truly the dumbest thing ever from CHS. Just what Greece needs--another rich currency to flail about in.

Sun, 05/13/2012 - 17:26 | 2422072 Optimusprime
Optimusprime's picture

I have generally tended to be an admirer of CHS's work. 


Now I am shocked to discover he may be a secret agent for Goldman Sachs.

Mon, 05/14/2012 - 05:46 | 2422976 RECISION
RECISION's picture

He's an idealist.

They can sometimes get carried away in their utopian dreams...

They are mostly harmless and nice to have around though. (unlike banksters)

Sun, 05/13/2012 - 17:28 | 2422074 CH1
CH1's picture

Normally I like Smith, but this line got me:

Engage in a transparent national dialog and reach a consensus about taxation and the role of the state in the Greek society and economy.

Seriously? You really think transparency and government can go together? Even when there is NO CASE in all of history when they ever did?

NO STATE does real transparency - politics is ALWAYS a scam. ALWAYS.

Take another Red pill my friend, they old one may be wearing off.

Sun, 05/13/2012 - 17:55 | 2422158 sessinpo
sessinpo's picture

Just might work? Boy, that is some strong crack ya got there.

Sun, 05/13/2012 - 17:58 | 2422169 Dingleberry
Dingleberry's picture

Ask Argentina how that peg worked out for them......

Mon, 05/14/2012 - 01:57 | 2422819 TNTARG
TNTARG's picture

It worked awfully. It's just the same shit! States need to control their national banks and even regional ones. States need to handle macroeconomic variables otherwise it's shit. Everybody knows that. PLIZZZZZZ!

Sun, 05/13/2012 - 18:13 | 2422190 icanhasbailout
icanhasbailout's picture

The only correct thing in the article is that the plan is crazy

Sun, 05/13/2012 - 18:28 | 2422216 Uncle Remus
Uncle Remus's picture

WTF is this? "Tool" Time?

Sun, 05/13/2012 - 18:47 | 2422247 q99x2
q99x2's picture

 A Crazy Idea That Might Just Work: Greece's New Currency, Bitcoin.

Fuck the Banksters.

Sun, 05/13/2012 - 18:57 | 2422264 ISEEIT
ISEEIT's picture

4.) Allow Ron Paul or some other Austrian to help you grow up.

5.) Grow up.

Sun, 05/13/2012 - 19:41 | 2422333 lasvegaspersona
lasvegaspersona's picture


I read the other 2 articles that stated that the Euro was doomed. Why?

You state that the fact that defaults will occur will hurt the currency? why? we have defaults with dollar denominated bonds all the time. GM harm done to the dollar there.

So what if defaults occur and banks go bust. So what if some countries leave the Euro behind as their local currency. The Euro could still exist and stay in use for international settlement and for some private deals could it not?

The Fed chairman can get a call from the US president and he can be forced to yield on issues. There is not one person who can threaten Draghi with the loss of his job. The Euro was developed to be independent of political pressure. It is not like the dollar. Furthermore it has considerable gold and has created a market for the real stuff. If Mr. Rich guy wants gold he can get it with the Euro. That is part of the Euro's 'DNA'.

Whether the Euro itself will go down is a real question. That it sucks to be in the Eurozone is not the issue. It does. But does it suck so bad that it kills the currency. You say yes. I am unconvinced.

Mon, 05/14/2012 - 04:29 | 2422923 Ghordius
Ghordius's picture

The answer is that Charles just believes the propaganda around the EUR. That simple. This includes the legend that Germany steers it's banks to a complete takeover of the eurozone. hahaha, just have a look who the holders of the Greek sovereign debt were and are. Charles lives in the dollarzone and does not understand that the environment changes the perception about the currency - same as how green someone's elses lawn can look like.

Face it, the Greek problem has a lot to do with the global banking community entrusting the rating agencies to steer their risk-taking.

Deleting all EUR-denominating debt would make the question about keeping it moot - as Charles himself writes the Greeks prefer a harder currency for obvious reasons - political and diplomatic posturing don't hide the fact that 70% of all Greeks want to keep the EUR. This number was 60% not that long ago.

Deleting the liabilities would jack up this number to 99%. As already commented, Sam is not the most loved Uncle in Greece. This silly article just asks for a total default - the question is how you transition to normality after an event like that, and points to the age old problem of lending: trust.

Last time someone got rid of his nation's debts (by paying them back) and lived fully within the national means: Romania under Ceaucescu. I am not aware of anybody proposing something similar.

A 300'000 EUR house suddently selling for 100'000? Come on, this is pure agitprop. Houses need a seller beside from a buyer, don't they? Charles should study the Argentinian and Chilean examples better. The leverage/hypo dynamics in Greece are different.

+1 for stating something most don't understand about the EUR: it could be still around without any country using it as a tax-token. It's strenght or weakness is not directly based on the membership per se.

Sun, 05/13/2012 - 19:56 | 2422355 orangegeek
orangegeek's picture

Good news for the US.  USD is long term bullish and the Euro is long term bearish.


Greek assets should come at a discount.

Sun, 05/13/2012 - 20:26 | 2422406 Lord Koos
Lord Koos's picture

Greece, the 51st state.  Not sure Greeks are fat enough to be Americans though.

Sun, 05/13/2012 - 21:11 | 2422466 Cabreado
Cabreado's picture

Greece needs leadership, unattached to the banker cabal, dedicated to Greece and her people.

It's amazing what humans can do when leadership is appropriate, and worthy of Trust.

Currency games won't solve anything.

A respectful "shame on you," Mr. Smith.

Sun, 05/13/2012 - 23:37 | 2422719 silverdragon
silverdragon's picture

The dollar is dead. Why jump out of a leaky boat into a sinking ship?

Greece is still one of the most beautiful countries in the world and will always have tourism income.

Walk away from the bankster debt. Go back to the Drachma and dig up some gold.

Mon, 05/14/2012 - 00:08 | 2422748 Likstane
Likstane's picture

How about we cede our sovereignty to Greece, then Greece reneg on the loans, We(Greece and the now New Greecian Colonies), except for Alaska, reinstitute the Gold Drachma(break out the the Ft.Knox barsand coin em' up), and then sit back and mop up the financial world.  An added bonus will be kicking those nasty Turks ass that have been flipping us shit for all these centuries.  We will have all these cool new army toys to bomb those Hash sucking Hajjis into Carjackistan.  Leave Alaska and prob Hawaii out of it.  Alaskans prob won't co-operate and Hawaiians are already too lazy.  This sounds just as reasonable.

Mon, 05/14/2012 - 02:04 | 2422823 TNTARG
TNTARG's picture

I believe this is some kind of joke. Tell me the difference between depending on the ECB and depending on the FED. They're fooling around with us, pretending we've not even been reading ZH's posts. Worse, they're fooling around with the poor PIIGS' people. Keep going, you'll have a bloody global revolution soon enough. Perhaps it's the way they gonna achieve Kissinger's "resizing" world population.!

Mon, 05/14/2012 - 04:49 | 2422949 Hunch Trader
Hunch Trader's picture

Did this piece originate at the FED? The real issue here is a currency war USA vs EU, US doing its damnedest to stay as the currency of global trade, in order to continue living for free by limitless printing.

EUR has been successfuly sabotaged by US ever since birth, or how GS "helped" Greece to join the eurozone.

Euro has been very successfully and purposefully manipulated higher since early 2006, which any currency trader watching his charts knows. The manipulators were smart, using a very undetectable and natural-looking fractal algorithm, but doesn't change the fact that large buying after european close is still purposeful manipulation (and with 80-120 pip raises, very successful at that).

The trillion € question is whether EU loses this war or not.


Mon, 05/14/2012 - 06:44 | 2423004 el-greco
el-greco's picture




Mon, 05/14/2012 - 07:12 | 2423017 Steve in Greensboro
Steve in Greensboro's picture

All but the first recommendation (100% default) are either harmful or stupid.

It always amazes me how Leftists and other big government types love "national conversations" about how big government should be. These conversations always occur among politicians (lawyers), the media (people too dumb to get into Ed school) and government employees (people too lazy to make it in the real world).

A group whose opinions I would care less about it would be hard to find.

Mon, 05/14/2012 - 11:47 | 2423891 dizzyfingers
dizzyfingers's picture

Yes, of course that's what the USA needs... more people expecting handouts.

Let them sneak in illegally like everyone else!!!!!!!!!!!!!!!

Mon, 05/14/2012 - 12:22 | 2424049 crashguru
crashguru's picture

Good idea, but its only one aspect. Gr needs radical measures re. Gov. bureaucracy etc. but one other important step imo would be the introduction of English as a second OFFICIAL language!

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