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Ann Pettifor

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An Open Letter to the People of Greece: Restore the Drachma

Posted: 06/21/11 11:03 AM ET

We write to encourage you -- to urge you on in your resistance.

In your defiance, you understand Greece is slave to the interests of private wealth.

You must understand too that it is private wealth that needs Greece. Greece does not need private wealth.

As is obvious to you -- if not to EU finance ministers -- Greek and other EU taxpayers are asked to shore up the immense wealth and reckless lending of private French, German, British and American banks.

Without your taxes, your sacrifices, the privatisation of your government's assets, these bankers once again face Armageddon -- as they did in autumn of 2008.

Just as then, so now they have rushed behind the 'skirts' of their defenders at the IMF and the EU. On their behalf, these unelected officials and some elected politicians demand that Greek and EU taxpayers shield private sector risk-takers from the consequences of their risks. The very antipathy of market principles.

In the process, the European Union is torn apart. Politicians, backed by officials, now defy the founding goals of the community and, in the interests of private wealth, set the peoples of Europe against each other.

On 20 June, 2011 the acting head of the IMF called for "immediate and far-reaching structural reforms, privatization, and the opening of markets to foreign ownership and competition."

Which proves our point: private wealth needs Greece. Greece does not need private wealth.

Greece's elected politicians have plunged the country into a spiral of decline, as austerity leads to greater economic crisis, more severe failure of public finances and social and economic hardship on a scale unknown since the inter-war years.

Is there anybody on earth who seriously believes that austerity will restore the prosperity of Greece? The idea is ludicrous.

But equally ludicrous is the idea that there is no alternative.

There is an alternative.

In reality, austerity marks the final failure of the existing arrangement between public interests and the interests of private wealth. Financial liberalisation has failed. The only way forward is a new arrangement, based on ones that have better served societies since the dawn of civilisation: since Aristotle identified the evils of usury and the barrenness of prosperity based on speculation.

The first step must be the abandoning of the Euro.

The Euro must be understood not as a currency of the peoples, but as an ideal of private wealth.

The Euro is a perversion of the greatest monies in history. These arose as a relation between people and the state. Through the institutional development of central banks, domestic banks, state borrowing, paper currency and double-entry book keeping, national monies have underpinned all of the greatest societies of the world.

Money has been aimed at the interests of society, of productive labour, and vibrant state and private activity alike.

But the Euro is a money aimed only at the interests of private wealth. It is divorced from individual nation states. Its statutes explicitly prohibit the support of state activity through money creation, while its foundation in monetarist doctrine inhibits private activity and has led to a world devoid of markets, at the mercy of large financial monopolies.

Greece must restore the Drachma.

If Greece restores the Drachma, social, private and financial interests can be re-aligned; prosperity can be reignited. Issued through the central bank and domestic retail banks, the Drachma can underpin a programme of public works expenditures, and in parallel, through multiplier processes, the spending of newly earned income to revive private activity in Greece. Through the Drachma, jobs and prosperity can be restored. The expertise to facilitate such a transition exists, moreover the very nature of money guarantees precedent on which action can be based.

It has been done before -- successfully

The last time the world threw off the chains of private wealth was in the 1930s. Then, Britain led the way. In September 1931, financial interests demanded high interest rates and austerity as the impact of the Great Depression hammered the people. At this point Britain, like Greece today, became defiant. The UK threw off its fetters and left the gold standard -- the Euro of a century ago.

Under Keynes's tutelage, Sterling was revived as a money managed by the Bank of England and protected from speculative and vested interest. Then in 1934, President Roosevelt freed the dollar, and with it, the people of the United States, who then embarked on the finest programme of public works expenditures known in modern history.

Great public buildings were erected, symphony orchestras established, writers were sponsored -- not least John Steinbeck -- fantastic murals created, swimming pools built. When, in 1935, a socialist government took power in France and freed the Franc from the fetters of the gold standard, only the fascist economies remained in thrall to private wealth.

Interrupted by war, and diluted at Bretton Woods in 1947, finance was still restrained as servant not master through the age of economic and social advance from 1945-1970.

Today, the likelihood of the UK or US once again taking this lead -- and defending society from the predations of private wealth -- is slim indeed. But there is no theoretical reason why the lead should not be taken by a smaller nation -- like Greece.

The history of the world teaches us the ebb and flow of prosperity between nations. It would be fitting too if a new era was to arise from the cradle of western civilisation.

Certainly Greece would feel the full force of the anger of private wealth, through their allies in the media, academia and politics. But this will follow from fear -- not reason.

Because Greece will show the world not only that there is an alternative, but that the alternative is very good.

To read more, visit PRIME -- Policy Research in Macroeconomics.

 

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