Marshall Auerback —The Greek Crisis: Time to Rethink the Concept of "Money"

As for the supposed “heterodox” quality of Parenteau’s proposal it is worth noting the following irony: isn’t it peculiar how we marvel at (and handsomely reward) financial engineers on Wall Street when they create all kinds of debt instruments that get counted as “money equivalents” (as an example, consider that perpetual bonds are ruled Tier 1 capital for banks under the Basel Accord rules), and all kinds of equity that look like debt? Or even better still, how we applaud the ingenuity of financial engineers when they stitch together such Frankenstein monsters as total return swaps, exchanging one set of returns on one asset for another set of returns, while never nominally changing the ownership of an asset (these types of instruments played a critical role in the 1997-8 Asian Crisis, as well as the more recent 2008 Financial Crisis). Yet for some odd, unspeakable reason, we simultaneously refuse to entertain even the possibility of a similar level of creativity and hybridization to the realm of government finance. Or we hand wave it away, declaring it dead on arrival, simply impossible, fraught with all sorts of inconceivably difficult complications, and bound to eventually lead to general irresponsibility, outright misallocation of resources, and ultimately, the dreaded hyperinflation. This appears to be the case even with things we should know nations have done successfully before (like 5 currency types running side by side in the US in the ‘20s), but no one seems to remember, or at least no one bothers to mention this “verboten” subject. It’s time for the Greeks to give the rest of the world a reminder of what is possible.

Good history lesson, too.

INET
The Greek Crisis: Time to Rethink the Concept of "Money"
Marshall Auerback