Tuesday, April 24, 2012

Soros Quote of the Century: “A sovereign that can print the money can’t default, will never default.”

There’s so much going on and so little time to put personal comment to it, that for the sake of expediency I need to just get some of these posts out there for you to read and share among your family and friends.

When we work together to share knowledge and experience, we are a much stronger force to be dealt with.  “Do not” allow any political organization to divide us from ourselves and our individual civil liberties.

YiT ~  Shelly

Soros: ‘A sovereign that can print the money can’t default, will never default.’

April 24, 2012 OpEd   By Bill Wilson

Speaking in Denmark on April 16 with that country’s economics minister at an event hosted by the Politiken newspaper, billionaire investor George Soros took aim at austerity measures in Europe, saying they were only making things worse as countries there attempt to control the sovereign debt crisis.

“You can grow out of excessive debt, you cannot shrink out of excessive debts,” Soros said, blasting balanced budget policies as the culprit behind slowing economic growth. In a Financial Times piece, he called European Union-imposed austerity measures “counterproductive”.

The irony is Europe is already in a recession that was brought on not by balanced budgets or fiscal responsibility, but by too much government debt.george-soros

In Greece, for example, this came in the form of excessive public pension and health care obligations. In Ireland, it took the form of guaranteeing the losses of failed banks as the country’s housing bubble popped.

Soros’ comments came after a far more revealing speech in Berlin on April 13 where he really got to the heart of the matter. There, he spoke on a panel entitled “The Future of Europe” at the Institute for New Economic Thinking’s (INET) Paradigm Lost Conference.

There he compared European debtors like Greece and Ireland to “third world countries that have become heavily indebted in a foreign currency”.

Soros explained, “This happened because they transferred their seigniorage rights to the ECB [European Central Bank]. That’s why they can’t print their own money. And because they can’t print their own money, there is a real danger that they would default.”

That’s a rather honest accounting of the current crisis from Soros. Under this analysis, the only thing that apparently separates Europe from the U.S. (or Japanese) debt crises is that we possess far more efficient printing presses in the Federal Reserve and the Bank of Japan as compared to the ECB.

Soros crystallized this seeming reality: “A sovereign that can print the money can’t default, will never default.”

Of course, according to Standard & Poor’s there were about 84 sovereign defaults in fiat currencies between 1975 and 2002, as reported recently by San Jose University associate professor Jeffrey Rogers Hummel. So default is actually a real possibility, even with a fiat currency. But let’s leave that aside for a moment.

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