TWINS: DEBT AND CREDIT•DEBT AND CREDIT •OLDER THAN PHYSICAL MONEY (GRABER, D. 5000 YEARS OF DEBT)•ANCIENT SOCIETIES: DEBT WRITE DOWN (RELIGIOUS PRINCIPLES)• "GERMAN RELIGION" : DEBT TRANSLATES TO GUILT•SURPRISE ? NET WORLD DEBT OR CLOSED ECONOMY : 0

TWINS: DEBT AND CREDIT•CORPORATE DEBT - INVESTMENT•BANKS CREATE CREDIT AND MONEY•PROBLEM: DEBT SUBSTITUTE FOR CONSUMPTION DEMAND (OECD

DECLINING WAGE SHARE SINCE 1970)•FINANCIALISATION

TWINS: DEBT AND CREDIT• JAPAN: WHY NO TROUBLE ON FINANCIAL MARKETS DESPITE OVER 200 PER CENT

PUBLIC DEBT TO GDP•SPAIN: NET EXTERNAL DEBT, CURRENT ACCOUNT DEFICITS, ECB – LENDER OF

LAST RESORT ?•GERMANY: CREDITOR, WAGE DUMPING, INDUSTRY/TECHNOLOGY

DOES DEBT MATTER ?•SOME ECONOMISTS CLAIM NO DUE TO IDENTITY OF DEBT/CREDIT

(ASSETS/LIABILITIES)•MERE REDISTRIBUTION ?•BUT IRVING FISHER, MINSKY ETC: DEBT DEFLATION• "POOR" DEBTORS, "RICH" CREDITORS, DRAG ON CONSUMPTION•NET EXTERNAL DEBT: TRANSFER OF RESOURCES ABROAD

DOES DEBT MATTER

•POWER RELATIONSHIP: GREECE•BAIL OUT OF GERMAN AND FRENCH BANKS•TRANSFER TO EFSF, ESM, TAXPAYERS, GERMANY: 360 MILLION EUROS

INTEREST

DOES DEBT MATTER•VAROUFAKIS: NO NEW BAILOUT, PRIMARY SURPLUS•NEW DEBT TO SERVICE OLD DEBT•DEPRESSION: CANT SERVICE DEBT (SCHÄUBLE DEFENDS GERMAN

TAXPAYERS ?)

DEBT SOLUTIONS•SIMPLY PUT: GROWTH, INFLATION, WRITE DOWN•GROWTH HIGHER THAN REAL INTEREST RATE•MUTUALIZATION ? PROBLEM: POWER•ECB: MONETARY FINANCING •BOND PURCHASE SECONDARY MARKETS – ASSET PRICE INFLATION

(FINANCIAL BUBBLES)

ECB & DEBT•ECB CRUCIAL TO PREVENT INTEREST RATE HIKES•DIRECT FINANCING OF PUBLIC INVESTMENT, WELFARE STATE VIA TAXATION•PRIVATE DEBT JUBILEE (STEVE KEEN): ECB MAY TAKE DEBTS ON ITS BOOKS,

CHEQUE TO HOUSEHOLDS•CONTINUE TO SERVICE PRIVATE CREDITORS ?•BANK RECAP ? PUBLIC CONTROL

ECB AND DEBT•REALITY: ECB SHOOTS THE GUN• IRELAND, CYPRUS, GREECE •GREEK COLLATERAL•EMERGENCY LIQUIDITY ASSISTANCE•LEGAL ARGUMENT: RISKLESS MONETARY POLICY•ECONOMIC RUBBISH: SEIGNORAGE, NEGATIVE EQUITY, ASSETS FOR FREE

ECB & DEBT

•VAROUFAKIS (MR NICE GUY): DEBT SWAP ECB/ESM•INDEFINITIVE BONDS (EXAMPLE WAR FINANCE UK)•VAROUFAKIS (NO MORE MR NICE GUY): IOU, PLAN B

DISCUSSION

GRACIAS !