Not as easy as you might think (leaving the eurozone)

Controls on the movement of capital could be a nightmare for banks with loans in Greece, potentially making it illegal for companies to repay debt in euros.

Here is more, but that is the key point.  One option is that the Greek government would prevent importers of food and fuel from paying in euros, but I would recommend against such a policy for obvious reasons.  Another option is that the importers will be allowed to pay with euros, but then that is one easy way of getting money out of the country.  I would expect that Greece’s “measured food imports” would rise rather suddenly, as invoices get reclassified, whether food actually is being imported or not.  (If Greece cannot do a good job collecting its taxes, how well can it patrol its exports and invoices?)  Then capital flight returns.

Under one scenario, Greece will experience both hyperinflation and hyperdeflation at the same time, depending on which medium of account one is measuring prices in.  As Arnold Kling would say, have a nice day.


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