Synopsis: Why might Greece abandon the euro and re-adopt the drachma? Peter Schiff argues that the drachma would be a politically expedient way of defaulting on Greek debt, but would ultimately lead to financial ruin for Greek citizens. Peter believes that the only difference between Greece and the United States is that US creditors still have faith in the dollar. However, it won’t be long before the Federal Reserve makes the dollar as worthless as a drachma.
- 0:19 – Greece gave up the drachma for the euro, so why would it re-adopt its old currency?
- 0:55 – Greek politicians knew they could borrow more money in euros than they could in drachmas, which is why Greece now has a debt problem.
- 2:05 – The Greek economy has failed, and Greece has two choices of how to default on its obligations.
- 2:32 – Greece can’t default through inflation, because it cannot print euros.
- 3:18 – Government debt is not the only financial obligation of countries like Greece. Politicians make financial promises to their constituents, such as public pensions and health care.
- 4:11 – Politicians want to default on creditors, while continuing to pay the people who vote for them. The drachma is their solution.
- 4:55 – Greek citizens won’t want drachmas. They’ll convert their paychecks immediately into euros, dollars or gold.
- 5:20 – The only difference between Greece and the United States is the perception of our creditors.
- 6:00 – The US already has a precedent for printing money, which is called quantitative easing.
- 7:02 – The Greek debt crisis will unfold in America when US creditors decide they don’t want to accept an increasingly weak currency.
- 8:35 – Peter’s advice is the same for Greeks and Americans. Convert your currency savings into something of tangible value that the government cannot create out of thin air – gold or silver.