Wednesday, May 16, 2012

When your country doesn't have enough money... go and make some.

Here is a cute story about an Irish town using old Irish currency to boost demand. Now, let's be clear on what they are actually doing: they are indroducing a new medium of exchange (Irish punt just happens to be conveniently recognizable as such by most people in Ireland, but in its absence, other things would serve), a.k.a., "money."

Obviously, this is illustrative of a macro point that Europe as a whole and peripheral Euro countries in particular are suffering from an acute problem: they don't have enough Euros. When you are at a point where commerce grinds to a halt for lack of specie, what you expect to happen in the age where actual specie has been replaced by fiat currency, is that your Central Bank will go and make some more. I mean... giving people money is by far and away the most obvious solution to a problem of them having none, right?


Next up: a return to blood-letting as a cure to most ailments.

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