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A Greek solution. How to dodge: Default, Austerity and Hyperinflation, cut the money in circulation in half.

This is from an essay by Martin Armstrong, of Princeton Economics fame:
“In Greece, between 1914 and 1928, the price index rose 868%. Greece had a budget surplus at the start of the war. They moved into a deficit by 1922. When they could not raise taxes and any hope of borrowing from foreign lenders vanished, Greece came up with a startling plan. On March 25th. 1922, the government ordered its citizens to cut their currency in half. They could retain one-half, and the other was to be redeemed for government bonds for 20 years at 6 ½%.”
“The Greek solution was again used on January 23rd. 1926. This time, however, the government took only 25% of the circulating currency and swapped it for debt. This was a very interesting solution that eliminated Hyperinflation in Greece.”
This has the potential to convert the Greek citizen into an investor/bond holder of its own country’s debt and opening up options to perform a staged austerity program over a realistic time frame. As risk is transferred onto each citizen bond spreads should revert to more normal ranges. 

The problem, of course is that Greece no longer has a country currency, it trades in Euros. So, Greece would have to drop out of the Common market on a structured debt timetable, exchange Drachmas for Euros at  50% of face value and issue bonds for the other 50% over an appropriate period. At the end of this period
Greece could again joint the EU and convert their currency into Euros. Each PIG could be taken through this process in a structured program.

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