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Note the Minsky quote.  Only sovereign IOUs issued in the sovereign's currency can be used to pay the taxes owed to the sovereign (which ultimately is the problem with the euro).  And if an IOU can't be converted into a form that can pay other IOUs, it's going to face rapid depreciation.  Only a sovereign can put on its currency "This note is legal tender for all debts, public and private" and make it stick.  Governments control that, financial institutions are their clearing houses, and neither will give up that power without a serious fight.  And as for the former, they make the laws and dictate what you can do to them.
by rifek on Fri Dec 21st, 2012 at 01:19:19 AM EST
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