One proposed solution to Greece's European debt problem is for the mediterranean country to abandon the euro and resurrect its old currency, the drachma. In his April Gold Videocast, Peter Schiff explains why a new drachma would be ideal for Greek politicians, but a disaster for Greek citizens and creditors. Peter also reveals why the United States faces the same debt dilemma as Greece. There's just one major difference - the US already has a currency it can devalue.
Stay tuned for a full transcript.
0:19 - Greece gave up the drachma for the euro, so why would it re-adopt its old currency?
0:55 - Greek politicians knew they could borrow more money in euros than they could in drachmas, which is why Greece now has a debt problem.
2:05 - The Greek economy has failed, and Greece has two choices of how to default on its obligations.
2:32 - Greece can't default through inflation, because it cannot print euros.
3:18 - Government debt is not the only financial obligation of countries like Greece. Politicians make financial promises to their constituents, such as public pensions and health care.
4:11 - Politicians want to default on creditors, while continuing to pay the people who vote for them. The drachma is their solution.
4:55 - Greek citizens won't want drachmas. They'll convert their paychecks immediately into euros, dollars, or gold.
5:20 - The only difference between Greece and the United States is the perception of our creditors.
6:00 - The US already has a precedent for printing money, which is called quantitative easing.
7:02 - The Greek debt crisis will unfold in America when US creditors decide they don't want to accept an increasingly weak currency.
8:35 - Peter's advice is the same for Greeks and Americans. Convert your currency savings into something of tangible value that the government cannot create out of thin air - gold or silver.
