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If there was no downside to devaluing your currency, everybody would do it. But as I am not an economist either, I don't know what they are.
But I agree that it would be beneficial for Greece to devalue because of the crisis, but you can't because you share the currency with Germany. So the Drachma it is.
[+]Guerilla0 points1 point1 point
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[–]Guerilla0 points
1 point
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Devaluation being done all the time would lead to hyperinflation. It's only reserved for times of crisis when deflation also occurs (not always) to to fix the problem. It's a tool to fix a crumbling economy, not to grow it. Not to mention that devaluation also means, well, less value practically resulting in lower wages (in no way though a 20% devaluation means 20% less real wages, it's much much lower because of a number of reasons)
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[–] Rea11yN0tMe [S] ago
If there was no downside to devaluing your currency, everybody would do it. But as I am not an economist either, I don't know what they are.
But I agree that it would be beneficial for Greece to devalue because of the crisis, but you can't because you share the currency with Germany. So the Drachma it is.
[–] Guerilla 0 points 1 point 1 point (+1|-0) ago (edited ago)
Devaluation being done all the time would lead to hyperinflation. It's only reserved for times of crisis when deflation also occurs (not always) to to fix the problem. It's a tool to fix a crumbling economy, not to grow it. Not to mention that devaluation also means, well, less value practically resulting in lower wages (in no way though a 20% devaluation means 20% less real wages, it's much much lower because of a number of reasons)