He outlines five steps:
Default on most of its Debt
Implement True Austerity
Implement True Free-Market Banking
Institute Monetary Competition
Fix the Drachma to Gold
I take issue with a couple of his points. First, whether it was wise or not, Greece did take on the debt. Debt is an obligation of honor, and unless there is no other alternative, debt must be repaid. I believe that there is another alternative.
I would suggest that Greece declare a debt moratorium for three years, while reaffirming its intent to repay its debt. During that time, it would take steps to revitalize its Economy to generate the money to repay its debt.
Second, while cutting the pay of public employees, as Hollenbeck suggests, is attractive, it will harm the public support needed to truly turn the country around. Instead, public employees should be encouraged to accept employment in the private sector by making private sector employment more attractive.
Finally, Hollenbeck says that Greece should issue a new Gold-backed Drachma. While Greece does hold some Gold in its Reserves, I expect this amount would be insufficient to protect the country from angry creditors.
I propose that, during the three year debt moratorium, Greece should issue Zero Coupon Bearer Bonds, designed to look enough like Euros as to be acceptable to circulate as money within Greece. These notes would be used to pay public employees, welfare recipients, and businesses selling to the government.
Part of what the government would buy from domestic businesses are products which can be exported. As those exported goods are sold around the world, the cash received would be converted into Gold and Silver, much as China and Russia have been doing.
I’m suggesting exports and conversions to Gold in the tens of Billion of Dollars! The Precious Metals already are set to rise considerably – with tens of Billions more demand from Greece, the metals should rise even more drastically.
With this level of goods being bought and exported by the Greek government, many and better paying jobs will be created within the Greek Economy. These jobs can be filled from current government employees and from Greeks currently on Welfare. Lower government expenses will push the underlying government budget even further into surplus.
Near the end of the three year debt moratorium, then Greece would announce a new Gold and Silver backed Drachma. The new Drachma, backed by Gold and Silver, priced higher than today, would allow for repayment of Greece’s external debt, as well as retiring of the Zero-Coupon Bearer Bonds.
This approach is quite unorthodox, which can help it to be successful. Mr. Hollenbeck’s plan, especially with these additions, could spell a major Economic turnaround for the Greek Economy.