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The idea was neither mine nor Steve Keen's, but it does pertain specifically to domestic activity. Green power and electric transit are the obvious targets and the New Drachma would be a way to pay for them. It was Greece's structural import imbalance to which I referred using the phrase 'primary deficit'. Primary trade deficit would have been clearer and it obviously imposes problems which Ireland would not have with a New Punt.

"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Tue May 1st, 2012 at 04:12:00 PM EST
[ Parent ]
Ireland might have those problems as well, though. Ireland is special among the GIIPS in that the difference between trade and current accounts balance is driven mainly by repatriation of profits rather than debt service. This would not be made to go away by defaulting on external debt.

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Tue May 1st, 2012 at 04:39:51 PM EST
[ Parent ]
For US firms doing business in Ireland that should be 'expatriation of profits' as they don't usually make it to the USA, going instead to some tax haven domicile.


"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Tue May 1st, 2012 at 07:26:47 PM EST
[ Parent ]
The discussion of the New Punt proposal starts about 7 minutes in. It came to Steve in an e-mail. He has not disclosed the name of who proposed it. Hopefully more will come out later. China long maintained a domestic only currency, the renmembi, which is similar to what is being proposed. From wiki:
Before 2009, the Chinese renminbi had little to no exposure in the international markets because of strict government controls by the central Chinese government that prohibited almost all forms of yuan holdings or transactions. Transactions between Chinese companies and a foreign entity would have to be denominated in US dollars. With Chinese companies unable to hold US dollars and foreign companies unable to hold Chinese yuan, all transactions would go through the People's Bank of China. Once the sum was paid by the foreign party in dollars, the central bank would pass the settlement in renminbi to the Chinese company.


"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Wed May 2nd, 2012 at 12:51:52 AM EST
[ Parent ]
The key points that Steve did not mention is that the government accepts the New Punt and banks are required to clear domestic transactions in New Punts.

I've been accused of being a Marxist, yet while Harpo's my favourite, it's Groucho I'm always quoting. Odd, that.
by BruceMcF (agila61 at netscape dot net) on Wed May 2nd, 2012 at 09:10:56 AM EST
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Heh, I deleted a sentence about the state accepting tax payments in New Punts after not finding that in his discussion.

"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Wed May 2nd, 2012 at 09:56:59 AM EST
[ Parent ]
Were those requirements in Argentina when they pegged their currency to the dollar?

"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Wed May 2nd, 2012 at 12:28:00 PM EST
[ Parent ]
Yes, but they were also trivially fulfilled for Argentina, because they didn't adopt the dollar as legal tender. They simply pegged to it.

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Wed May 2nd, 2012 at 04:59:09 PM EST
[ Parent ]

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