Best of the Week
Most Popular
1.Crude Oil Price Trend Forecast 2016 Implications for Stock Market - Nadeem_Walayat
2.Odds of Winning Walkers Crisps Spell & Go olidays K, C and D Letters - Sami_Walayat
3.Massive Silver Price Rally During The Coming US Dollar Collapse - Hubert_Moolman
4.Pope Francis Calls For Worldwide Communist Government - Jeff_Berwick
5.EU Referendum Opinion Polls Neck and Neck Despite Operation Fear, Support BrExit Campaign - Nadeem_Walayat
6.David Morgan: There Will Soon Be a Run to Gold Like You've Never Seen Before - Mike Gleason
7.British Pound Soars on BrExit Hopes Despite Remain Establishment Fear Mongering - Nadeem_Walayat
8.Gold Price Possible $200 Rally - Bob_Loukas
9.The Federal Reserve is Not Going To Raise Interest Rates and Destroy Gold - Michael_Swanson
10.Silver Miners’ Q1’ 2016 Fundamentals - Zeal_LLC
Free Silver
Last 7 days
David Cameron Questioned on Out of Control Immigration at TEN TIMES Conservative Election Pledges - 30th May 16
Bitcoin Price Skyrockets And Is Now Up More Than 100% This Jubilee Year - 30th May 16
This Is Not The America My Parents Immigrated To In 1957 - 30th May 16
“Debt, Not The Economy, Reaches Escape Velocity” With Graham Mehl - 29th May 16
EU Referendum, Black Vote LEAVE or REMAIN? Which is Worse for Racism for Britain's Ethnic Minorities? - 29th May 16
Billionaire Gross: Jubilee Debt Relief as Prelude to New Global Economic Order - 29th May 16
Wargaming North Korea - Assessing the Threat - 29th May 16
EU REMAIN Population Forecasts - England 4.1 million Explosion, London Migration Crisis - 28th May 16
A Guide to the Trump-Sanders Debate - 28th May 16
Gold And Silver – At Significant Support. New “Story” Developing - 28th May 16
The Next Systemic Lehman Event - New Scheiss Dollar & Gold Trade Standard - 27th May 16
Energy and Debt Crisis Point to Much Higher Silver, Metals Prices - 27th May 16
Gold Junior Stocks Q1 2016 Fundamentals - 27th May 16
These Crisis Markets Are Primed to Deliver Big Gains, Platinum Never Cheaper! - 27th May 16
Operation Black Vote BrExit Warning for the Wrong EU Referendum - 27th May 16
UK Immigration Crisis Hits New Extreme, Catastrophic ONS Migration Stats Ahead of EU Referendum - 27th May 16
Many of the World’s Best Investors Made Their Fortunes This Way…And You Can Too - 27th May 16
The Ugly Truth About Stock Market Manipulation and Gold Prices - 27th May 16
Gold Price Looking Vulnerable While Gold Stocks Correct - 27th May 16
The 5 Fatal Flaws of Trading - 27th May 16
The Next Big Crash Of The U.S. Economy Is Coming, Here’s Why - 27th May 16
A New Golden Bull or Has the Market Gone Too Far Too Fast? - 27th May 16
It Feels Like Inflation - 26th May 16
Negative Interest Rates Set to Propel the Dow Jones to the Stratosphere? - 26th May 16
S&P Significant Low has Occurred – Not Likely! - 26th May 16
Statistics for Funeral Planning in UK Grave - 26th May 16
Think Beyond Oil And Gold: Interview With Mike 'Mish' Shedlock - 26th May 16
Hard Times and False Mainstream Media Narratives - 26th May 16
Will The Swiss Guarantee 75,000 CHF For Every Family? - 26th May 16
Is There A Stocks Bear Market in Progress? - 26th May 16
Billionaires Are Wrong on Gold - 26th May 16
How NOT to Invest in the Gold Market - 26th May 16
The Black Swan Spotter...Which Saw the Oil-Crash coming; now says the “Invisible Hand” will push Brent to $85 by Christmas - 26th May 16
U.S. Household Debt Still Below 2008 Peak - 25th May 16
Brexit: Wrong Discussion, Wrong People, Wrong Arguments - 25th May 16
SPX is at Strong Resistance - 25th May 16
US Dollar, Back From the Grave? - 25th May 16
Gold : Just the Facts Ma’am - 25th May 16
The Worst Urban Crisis in History Could be Upon Us - 24th May 16
Death Crosses Across The Board Are IRREFUTABLE Stock Market Sell Signals - 24th May 16
Bitcoin Trading Alert: Bitcoin Price Stays below $450 - 24th May 16
Stock Market Crash Death Cross Doom Prevails - 23rd May 16
Did AMAT Chirp? Implications for the Economy and Gold - 23rd May 16
Stocks Extended Their Rebound On Friday - Will They Continue Higher? - 23rd May 16
UK Treasury Propaganda Warns of 3.6% Brexit Recession, the £64 Billion Question? - 23rd May 16
Stock Market Support Breached, But Not Broken! - 23rd May 16
George Osborne Warns of 18% Cheaper House Prices - BrExit for First Time Buyers - 22nd May 16
Gold Bull-Phase I Continues to Confound (The Trek to “Known Values”) - 22nd May 16 r
Avoiding a War in Space - 22nd May 16

Free Instant Analysis

Free Instant Technical Analysis


Market Oracle FREE Newsletter

Why 95% of Traders Fail

Forget Drachmas Greece Syriza Government Could Instruct Central Bank to Print Euros!

Currencies / Eurozone Debt Crisis Jul 02, 2015 - 01:29 AM GMT

By: Nadeem_Walayat

Currencies

This week Greece started to default on its debt repayments. However, unlike other countries that have gone bankrupt in the past, Greece as part of the Euro-zone officially cannot print money and inflate the purchase power of debt, wages and savings away. In exchange for this Greece enjoys monetary stability i.e. low inflation which means the only way to deal with the structural deficit that is generating the debt is to CUT government spending and wages so as to make Greece more competitive.


Unfortunately for Greece, the Greek people fell for anti-austerity propaganda by electing in January a marxist Syriza government into power following which all hell broke loose, with Greece entering into a death spiral right upto this weeks collapse of the Greek banking system with cash withdrawals currently limited to just Euro 60 per day and Greece defaulting on an technical IMF loan repayment of Euro 1.6 billion, but which had already been financed as part of a Euro 360 billion bailout.

As mentioned earlier the Greek banks have been instructed to limit cash withdrawals to just Euro 60 per day that given that Greece is fast running out of euro currency will likely be cut in half imminently as Greece literally runs out of money.

However, In the face of this crisis, Greece does have the nuclear option, one that could threaten to blow the whole euro-zone apart as what apparently no one is reporting on is the fact that Euro's in Greece are printed by the Greek central bank. Therefore Syriza faced with empty bank vaults could just command the Greek Central Bank to start printing Euros without ECB authorisation, which would instantly result in a devaluation of Greek Euros that would be marked down in value against other nation Euros.

Greece printing euros would instantly wipe out the value of the debt denominated in euros as well as wipe out most of the value of savings and purchasing power of earnings i .e. Greece would effectively be printing money to inflate its way out of the crisis and thus the Greek inflation rate would soar.

The reason why this is so dangerous is because contagion would be immediate in that German Euro notes would be deemed as being the most valuable and those of the PIIGS nations being marked down in value as each Euro note serial number is marked with the country of origin prefix as the following Italian euro note illustrates that is identified by S -

List of Euro country of origin prefix:

Belgium Z
Germany X
Estonia D
Ireland T
Greece     Y
Spain     V
France     U
Italy     S
Cyprus     G
Luxembourg 1
Malta F
Netherlands P
Austria N
Portugal M
Slovenia H
Slovakia E
Finland L

So, for example someone shopping in a store in Greece and eventually the other PIIGS would be able to buy MORE with the same denomination German Euro note marked with an X then the notes of other euro-zone nations and especially that of Greek Euro bank notes marked with an Y.

Whilst today the suggestion that Greece could start printing euros without permission may seem impossible, however so did Greece defaulting on the IMF loan and a collapse of its banking system just a week ago!

So all this talk in the media of it being impossible for Greece to launch and print its own currency for many months if not years is WRONG, for Greece already has printing presses ready that can immediately print Euros without limit.

In fact Greece may have been stealthily stock piling currency paper and ink in readiness of detonating its nuclear option. In fact Greece may already be printing billions of euros in secret that will only start to become apparent when Greece as if by magic is able to start to relax its capital controls such as limits on withdrawals. In fact the euro notes would be just the tip of the money printing ice-berg for the Greek central bank only needs to press a few buttons to electronically print tens of billion of euros and then eventually in the hundreds of billions as Greece goes through its own hyperinflation event and we will probably see inflation take off in all other euro-zone nations except Germany.

Think it can't happen ? Well Greece lied about its debt for a decade! So lying about printing euros without permission would be in character of successive Greek governments.

Ensure you are subscribed to my always free newsletter for ongoing in-depth analysis and detailed trend forecasts that include the following planned newsletters -

  • Why Thousands of Muslims Are Going to Live, Fight and Die in Syria / Iraq
  • US Dollar Trend Forecast Update 2015
  • Gold Price Forecast Second Half 2015

Also subscribe to our Youtube channel for notification of special video projects such as -

  • The Illusion of Democracy and Freedom
  • Did God Create the Universe?

By Nadeem Walayat

http://www.marketoracle.co.uk

Copyright © 2005-2015 Marketoracle.co.uk (Market Oracle Ltd). All rights reserved.

Nadeem Walayat has over 25 years experience of trading derivatives, portfolio management and analysing the financial markets, including one of few who both anticipated and Beat the 1987 Crash. Nadeem's forward looking analysis focuses on UK inflation, economy, interest rates and housing market. He is the author of five ebook's in the The Inflation Mega-Trend and Stocks Stealth Bull Market series that can be downloaded for Free.

Housing Markets Forecast 2014-2018The Stocks Stealth Bull Market 2013 and Beyond EbookThe Stocks Stealth Bull Market Update 2011 EbookThe Interest Rate Mega-Trend EbookThe Inflation Mega-trend Ebook

Nadeem is the Editor of The Market Oracle, a FREE Daily Financial Markets Analysis & Forecasting online publication that presents in-depth analysis from over 1000 experienced analysts on a range of views of the probable direction of the financial markets, thus enabling our readers to arrive at an informed opinion on future market direction. http://www.marketoracle.co.uk

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any trading losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors before engaging in any trading activities.

Nadeem Walayat Archive

© 2005-2016 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

Catching a Falling Financial Knife