Why No Inflation In Greece?

“There is much to be debated about the prices’ resistance to falling at the same pace as wages, and it is often one of the troika’s arguments that there is not enough competition in the products markets. However, aside from the fact that prices are known to be sticky downwards,”

 

The reason prices have not fallen is that the cost of living has increased. How are price supposed to fall if petrol is more expensive, if people are having to pay more property taxes and income taxes? Where is the extra money going to come from to pay these taxes if the income of businesses goes down because of falling demand and reduced profit margins?

 

And as a side note. This talk of expensive Euro in Greece and cheap Euro in Germany is complete and utter garbage.

 

A currency is a measure of wealth. To criticise the Euro is akin to criticizing kgs. To use an analogy. The reason Americans are overweight is not that they are fat but that kgs are too small a measure for the American body. The kg needs to be different to the kg in Europe.

 

Of course a completely stupid argument and yet it is one apparently intelligent people have about currencies.

 

Again, kg as a measurement is not the problem, it is measuring the facts and in the case of Greece, the Euro is telling us that the economy is massively inefficient.

 

A cheap Euro or expensive Euro is not going to solve the issues in the Greek economy i.e. government red tape in employment, in pensions, in starting a business, in closing a business, in bankruptcy, in the legal system, in property ownership, in the tax system etc etc.

 

Changing the currency is not going to change the fundamentals it is only going to change the way things are measured.

 

The only thing the Drachma would do for Greece, is allow the government to disguise its inefficiency behind the camouflage of inflation. Nothing more.

 

The Euro is forcing the Greek government to face its incompetency, unfortunately, the Greek government is refusing to change and is passing the cost onto the taxpayer and this is the cause of the crisis.

 

The Euro has exposed an incompetent government. Nothing more.

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s