View 728 Wednesday, June 13, 2012
Milton Friedman famously predicted the end of the Euro within ten years. It has lasted longer than that. In today’s Wall Street Journal it is argued that Friedman had the timing wrong but his prediction was correct: the Euro is doomed. O’Driscoll argues that Greece is out of money and will have no choice:
Absent a truly dramatic event, Greece will exit the euro not by choice but by necessity. It will do so not because the drachma (its old currency) is superior to the euro, but because the drachma is superior to barter. Greek standards of living, which have already fallen substantially, will fall further in the short- to medium-term. It will then be up to the Greek people to forge a new future.
Greece has no money to pay its overpaid civil servants anything at all; they still have to eat, and the grocers must [ay their bills, but no one has money. The only remedy will be to print drachmas. When Greece leaves the Euro the currency will still exist, but then will come Spain, with a much larger economy than Greece, and Spain is going to run out of money too.
Whether he is correct or not, I think some kind of runaway inflation is coming.
Tomorrow is Flag Day. Happy Birthday, Roberta.