So what will Greece use for money tomorrow?

Keith Hudson

Tomorrow will be interesting in Greece because there’ll be no money.  Because Greece hasn’t paid its IMF loan today it will be in default come midnight. The European Central Bank has said an hour or two ago that it won’t be . . . supplying any more euros to Greece’s central bank tomorrow morning — which, in turn, won’t be able to send money onto the high street banks which, in turn, won’t be able to fill up the cash machines.

So what will happen?  Will the Greeks fall back on cigarettes as a currency, a time-honoured substitute in times of trouble?  Cigarettes, having an intrinsic value of their own are, in theory, as good as gold, though maybe not quite as convenient to carry around. If enough cigarettes could be got into the country quickly enough — say, arriving on a freight container vessel — then they would serve very well.

But only if the economy were run at a low ebb for a few days — basically just buying and selling food and drink. For any other purposes, and even if there were enough cigarettes arriving tomorrow, the banks don’t have the space to store cigarettes in enough quantity to serve as their cash tills.  Nor can cash machines be easily adapted to to deliver cigarettes instead!  Perhaps the supemarkets could use half their space to serve as their own cash tills — so long as their customers learn to eat a lot less food than usual.

No, to be serious, cigarettes are just not on for any normal modern economy, not even on a temporary basis.   So is the Eurozone hoping that Tsipras and his government will change their minds after all? The Greek Cabinet is sitting as I write.  If they decide to call off the referendum and pay the IMF before midnight, then I can’t see the government surviving much beyond tomorrow morning.

One thought on “So what will Greece use for money tomorrow?

  1. Greetings, Keith
    Perhaps what is needed is a bit of grand chaos. It seems to me that the EU has created a top-down, overly complex, overly large financial system–the product of economic theorists rather than pragmatic and experimentation and observation–and that it lacks robustness.

    Perhaps a period of chaos, in which other countries would likely participate, is what Europe needs to make the deep changes that are now so clearly needed. National accomodations, whether to fiscal or immigration or military doctrine, will, I would guess, merely contribute to the calcification of the present system.

    Your essays are gems, Keith. What a delight to read them.


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