And the Weak Suffer What They Must? | Yanis Varoufakis | Talks at Google

Welcome everyone to another talk at the Google event. Today's guest needs no introduction. Today's virtual guest is Yanis Varoufakis, former Finance Minister of Greece during one of the most tumultuous periods in its financial history, if not its history in general. He is a professor of economic theory at the University. from Athens and former member of Parliament. He is the author of The Global Minotaur, among other books, and his most recent book is And the Weak Must Suffer What They Must. I would like to ask Mr. Farkas to come to the podium here and share with us his thoughts, thank you, good afternoon everyone, it is a very rare occasion for a political, academic and confused person like me to be in a place like this.

I've done it before in similar organizations, although Google is unique for reasons that don't need me to explain, and I have great memories of trying to rally a tech audience with my concerns about the ways of the world, in other words, politics. I am going to talk to you today and I will try to encourage you to participate in starting a dialogue with me about the concept of money. The purpose is not academic, it is not to have a philosophical discussion about money. In my opinion, we live in a very problematic world in which Europe and that is

what

it is about if you want the part of the global economy where the problems of global capitalism are manifested in the most poignant and magnified way and Europe is perfectly capable of destabilize the United States, has already destabilized China and through China has destabilized Latin America and if my analysis is valid water, the next generation will face challenges that have not been faced since the 1930s.

I hope I am completely wrong, but I'm afraid not, and money is a very good starting point for a conversation, especially with an audience like Your Good Self, the reason is that money is the most quantifiable variable in any column. Love, beauty. Worth. They are all extremely important, but their qualities. Any attempt we make to quantify them devalues ​​them in some sense, but the money comes as a result of commodification. and commodification to convert values ​​into quantities to quantify

what

the market considers valuable now the reason to start with money to tell a story about the problems of global capitalism and the challenges of the next generation is because if you think of money as a well, what is good?, something that people want, yes, then tomatoes are good, potatoes are good if people want to eat them and money is good, if people want money, if it is good, then in a The commodified capitalist world

must

also be a commodity and of course it is a commodity, just look at the currency market, huge transactions take place every day, money is exchanged for money, then money is a good and it is a commodity, So why is its price negative in more than 40% of the world? the price of money is an interest rate, it is the price that one is willing to accept for not using money to give it to someone else and we live in a world, especially in Europe, where the price of money is zero or extremely low or even in places like Japan in Europe and in certain bond markets here in the United States it is negative now, how can a good have a negative price?

It

must

be bad by definition, negative prices are associated with bad, so you have toxic waste in your backyard, you are prepared. paying someone to get rid of it, that is what negative price means, so how can it be that money can have a negative price, what is the reason why one is not just a quantity, it is not Just a commodity, is it much more than that? By the way, the 19th century revolutionary referred to this as the alienated capacity of Kalmyk humanity, but forget about Marx, since we are in California and not Vermont, which I think is the People's Republic of this time or New Hampshire or something like that.

Think about why the price of money in Europe today is negative and why it is almost zero if you look at the feds' overnight interest rates, if you are a businessman and you are tossing and turning in bed for the night reflecting and wondering if you should invest in the new production line a new company a new product a new line of products what you were worried about at that moment you are worried about whether that investment will give an adequate return and what this will depend on It will depend on Two things, it will depend on your costs and it will depend on the demand for the product that your production line will produce six months, eight months a year from the time you make the investment, if you choose to do the English. so the price of money, the interest rate is a cost input, so the higher the price of money, the more expensive it is to borrow or use it for reinvestment purposes, so you think okay, then This is where it works like a when your price goes down, you think okay, my costs are going down, so my propensity to invest goes up, but that's not what keeps entrepreneurs up at night and potential investors.

What really keeps them awake at night is the prospect of sufficient demand for product six. months a year later and what this depends on depends on whether other people like her or himself, who are also tossing and turning at night, will make the decision to invest because the aggregate level of demand is driven by the aggregate level of investment, so This is a problem that suddenly breaks out of the standard conception of money as a commodity that has a price, like potatoes, which have a price because edible potatoes, if you have an excess supply of potatoes, you are selling potatoes and you want to get rid of them. before the end of the day because you don't want to sell the same stained potatoes tomorrow, what do you do to get rid of them?

You reduce the price and at some point you will reach a price level that will clear the market. their souls people just buy if you lower it to 20 cents a ton, people would do it so that there is a price that balances the market, but the investment game that I just described is precisely that again and what it is again is a situation in which the result does not depend only on what you do but depends on what others do and what you think

they

think that you think

they

will do, this is the game in chess as in the stock market so suddenly Whether you invest or not depends on your belief or optimism that the level of aggregate investment will exceed a certain threshold because only if it exceeds a certain threshold will there be enough demand to make your investment profitable, just as I did when I was still a professor.

I tried to explain this to students, especially MBA students, who are ruthless and try to harm each other like there is no tomorrow. I remember I loved doing that, it was a lot of fun for me, not for them. I used to tell them, you know what? I hate grading scripts, so I'll give you your grade now, day 1, first class. I will give you the semester door from time to time, we can meet for the purposes of your education and mine, yes, just grab a piece of paper. write the student number and I want you to write the advertisement number with one digit between 1 and 9 including one and nine and your grade will be as follows.

I'll pick up this piece of paper. I will find the sheet of paper with the lowest value. choosing the whole number that would be the common factor for all of you will multiply it by eleven and for each of you will subtract eleven times the minimum of your own choice and that will be approved, which means that if everyone chose nine, the minimum would be 999 9 times 11 would be the common factor for everyone - 9 their own choice 90% of everyone if everyone chose 8 80% of everyone if everyone chose 110 percent of everyone well now I can tell you that every time I did this the vast majority chose one and everyone failed, okay, and you think this is not a prisoner's dilemma, it is not a stowaway problem, it is not a situation where you want to cheat, you want others to choose a high number and you want to choose a number low, why, because yes. you choose the low number, then the minimum goes down and you lose.

Okay, here's a typical coordination problem. Everyone is trying to do the next thing. By the way, the optimal strategy in this game is to choose what you think the minimum will be. among the rest and choose that, so if you say that everyone else will choose nine, you better choose nine because if you choose eight the minimum becomes eight and you lose two, if you choose the middle it will be eight, you choose it if you choose, then It's a guessing game, everyone tries to guess the minimum and what they end up doing depends on the average degree of optimism, if the class is optimistic, people will be optimistic, that is, everyone else will be optimistic, so everyone chooses nine. confirming the optimism that they imagined would be present but if they are pessimistic they will not only accept you.

I remember I would pick one of those students and tell them, okay, you picked one, white is only one, don't do it. You realize that she is choosing one, you fail and they all fail and the answer is still yes, but you know what a rational belief prediction it is to think that there would be at least one person in this room who fears that there is another person in this room. room who is afraid that there is someone in this room who will choose one because then one will be the minimum option and then I will do better since one will be the best option to choose one because if I choose more then it will be subtracting more than one form a common factor, well , that is the conundrum of investing, if investors fear that the level of investment will be low, then the level of investment will be low and their pessimistic expectations will be confirmed and then turn around, let's say.

Look, I was right, but that doesn't mean they were right, it means we live in a world of multiple equilibria, a good thing 987 in the example you were given some horrible 1 2 3 and, courtesy of being equilibria, there is no outcome which is more equitable than the other all are balances some are better some are worse what is the moment if we go from good to bad or vice versa average optimism this is a problem with recessions that turn into permanent depressions this is a problem when the investment is completely stagnant have you noticed that in the United States today we have the following very interesting and very worrying phenomena with extremely low interest rates extremely high profit rates and very low investment levels as possible the interest rate? should be in equilibrium more or less the same as the rate of profit the rate of profit should reflect the rate of interest and vice versa if the two are out of place it means we have an incongruity in the manger something is broken in our economy and if the profit the rates are high, why don't people invest for more profits and yet they don't do it?

I think the example I gave you with the failure of optimism offers an answer right now, we have a situation where, if you take the United States, Europe and Britain, the British, some of them like to be consider outside of Europe, okay, sure enough, Europe in the United States we have last time I looked at about six trillion dollars doing nothing, cutting the financial sector, not investing, refusing to invest, why is it not that those Those who have that money do not want to invest it and by the way, by investment I mean real investment, I do not mean buying houses and buying stocks, that is not investment, investment is when your company says: "Okay, let's go." to expand this particular sector we are going to invest in people, we are going to invest in machinery, we are going to invest in new technology, that is invested, so one thinks of capitalism as a system in which you have savings, you have financial intermediaries to take them. savings and lend them to companies that then invest those investments produce the income that then replenishes the savings and this recycling process continues but at this moment the savings in the developed world, let's put it this way, exceeds the investment by seven trillion never before in the world.

In the history of capitalism we have had such high levels of savings and such low levels of investment if you think of the interest rate as the price of money that must balance savings and investment when there is an excess supply of money when there is savings and there is investment. there hmm must what happens is that the price of money must fall for this to happen, except that the price of money falls below zero and this does not, this gap does not improve it does not disappear and why does it not disappear, come on Let's go back to the bedroom of the businessman who tosses and turns in bed at night and let's say that this is a very old-fashioned performer like me.

I'm not an interpreter but I am old-fashioned because I listen to the radio at night when I can't sleep: the BBC World Service since I was a child for some reason and at 3:00 in the morning tossing and turning wondering if I will invest if I won't invest and suddenly news comes that Janet Yellen is reversing the taper. to raise interest rates like she has announced you would do, she is going to reduce them even more because of China because of slow growth blah, blah, blah, blah, things you read in the Wall Street Journal, the Financial Times every day , what do you think at that moment how good the prices are?

One is growing even further into negative territory. OK,invest or think what I think you will think. Oh my god, Janet doing these things must be really bad and then they'll go down. the price of money makes you stop investing and does exactly the opposite of what happens in the potato markets in the potato market the price goes down and the excess supply disappears in the money market when we are trapped in a crisis like this the price of money goes down and the problem gets worse and the excess supply of money gets worse and this is Why are we stuck in this endless crisis after 2008?

The United States has stabilized thanks to the activities of the Federal Reserve, but this incongruence between savings and investment has not disappeared. That is why there are stagnant wages and that is why after all generation in the United States after the mid-70s, so for the first time in the history of the United States, the end of the escalator between the Federation between the Independence o the United States and 1974 salaries are constantly increasing, each generation knew that the next generation will be better From 1973 onwards, average salaries have been decreasing and have not stopped decreasing since then because humanism was promoted in the 80s, 90s and 2000 due to debt.

The wage increases that ceased were replaced by increases in debt in 2008, our well-deserved wine, Nemesis followed. due to arrogance mortgage foreclosures since then stagnant salaries skyrocket inequality and the result is Donald Trump I in the United States in Europe we have even worse phenomena we have the Nazis in the Greek parliament we have the alternative route Deutschland in Germany where the Popular Front in France We have you in Britain, the list is endless, but in my opinion these are just symptoms of this conundrum we face. Yes, now a lot of people, especially here in the United States, tend to think that the problem is the Federal Reserve, the problem is too.

With a lot of easy money, the problem is that we have lost control of the money supply, so we ended up with the gold standard, instead of having a controlled real product that provides control by nature, we allowed the Fed to create easy money before of the crisis. After the crisis and there is a lot of credibility in the money markets, all this is nonsense, I do not want to say that it is very simple, there cannot be a gold standard, there cannot be political money and I have already explained it, I think why the history of optimism, because the moment pessimism prevails and it can prevail for any reason, for any reason, there may be some earthquake, there may be a bubble that bursts in some subprime market or in some particular money market. all kinds of different candidates to lead a degree of pessimism in the bustling and dynamic capitalist economy, but the moment the seeds of the person begin to grow and become an ugly plant, at that moment the only thing that can be done is do not reduce the interest rate, it is not good a deflationary spasm by reducing prices price of money price of labor make things cheaper that you want increase the supply of the only thing you could do at that time is intervene politically through a political mechanism to effectively create an expansion of the money supply on the one hand, and expand public investment, on the other hand, this is a New Deal idea, a very simple idea that didn't work perfectly in the 1930s, but I can assure you that I would actually like to convince you if I had another lecture to We talked about what prevented America's slide into fascism if it weren't for the New Deal.

The Steinbeck Grapes of Wrath would have led to the rise of extremely unpleasant political forces in this country. It's even debatable whether America will side with the Allies against the Nazi Nazis in Europe, so the idea that our criticisms are very justifiable criticisms of establishment authorities remember I'm leftist so I'm the last person to defend the established way of doing things, but the idea that somehow we will find the technical solution, whether we call it Bitcoin or some technological evolution of money that will replace the fiat money that the Federal Reserve, the European Central Bank, etc. print, this is a simple fantasy and let me point out that if you Imagine that you take the history of Bitcoin, which is a digital version of the gold standard.

You link the amount of money to some political process in the case of gold, to the amount of gold you can find and under the surface of the earth in the case. from Bitcoin to some algorithm invented by someone with a Japanese pseudonym, if you do that, then you ensure two things: first, that economic development will be slower than it would otherwise be in the long run simply because at some point the development will exceed or grow the The growth rate will exceed the growth rate of the money supply when that happens this will immediately have a deflationary effect so there will be less money chasing more goods so prices will have a natural tendency to fall at the moment. you introduce deflationary expectations into the mentality of consumers investors producers and so on suddenly you have a decrease in investment why because if you know that something that today costs 10 tomorrow will cost 9 you will have a natural tendency to delay consumption and therefore if the Investors think that there will be a natural tendency to reduce consumption, they will have a natural tendency to reduce investment, so a downward deflationary spiral begins, even if it is not very acute, so that is one of the reasons, the second reason It is when there is a crisis and a crisis.

It will always happen that they are to capitalism what hell is to Christianity and they are nice but essential, the system does not work, otherwise you will end up with a crisis and no ability to increase the money supply to create liquidity to fight with. the insolvencies that are the result of the crisis, of course, what we have been doing is central bank quantitative easing that started in Japan in the 1990s and then carried over here in the United States, with Ben Bernanke responding aggressively increasing the money supply for the purposes of what I suggested and now he, which always Europe always arrives years late, doing it in Europe now the problem with this is that yes, it is a palliative for the economy in crisis, an economy in crisis global, but it is only a palliative, it is like giving aspirin.

For someone who

suffer

s from a much worse disease, it helps, this does not work and the central bankers know it, which is why politicians have not managed to unite and support the central bank with the only thing that can be the Silver Bullet. that kills the pessimism of the New Deal idea, so the point I'm trying to make here in the heart of the tech industry here at Google is that money seems like a quantity, people like you think it's okay, quantity, technical, mathematical solutions, everything that is quantified must be a mathematical problem that we can solve without the mess of politics, but my message to you is that money is not only the quantity, it is also a quality that has to do with the human feeling, the opt-in is not what I was referring to and it cannot be quantified.

Remember the game I was playing with my students. Oh, I was forcing my students. It has no solution, there are multiple solutions and when you don't have them, everything is possible, but each result is a potential solution for the mathematical model. hmm, then you have activities like if you don't know how to imagine a model of material obstacles that reports that tomorrow there is the same probability of rain, hail or sun. It may not be mathematically exact, but it is useless for prediction purposes, so technology and mathematics cannot replace the political process that is necessary to stabilize a debt-deflationary global economy or a national economy or an economic bloc like that of the European Union.

Of course, I'm a big proponent of channel technology solutions as long as we don't replace politics with technology as long as we merge progressive politics with good technologies and let me just give you an example of something I was planning to do at the Ministry of Finance. in Greece, maybe get some feedback from you in Europe. the reason why you would be a basket case, think about it, it happened in 2008, unemployment increased in both Europe and the United States to 12%, in Europe it has dropped to five and a half percent, but we are at 12%, still we have deflation in investment. is the lowest 7 bits, why this?

Well, if we look at the euro zone, the group of countries of 19 countries use the same currency but without even having a confederation, much less a direction, we created an amazing economic system, we have a great central office. bank like the Federal Reserve, but no state next to it or behind it, nor the Treasury, and we have many, many 19 governments without central banks, so you can imagine why when the force of the 2008 financial disaster hit both the United States and the Europe, the United States had the automatic stabilizers not political not intelligent the politicians could all be asleep they could all have been on vacation the beauty of the federal system is an automatic stabilizer that comes into operation without anyone knowing, so, for example, when Nevada went under, the climate was immediately bailed out by the FDIC, not the state government, about Nevada going to Paris and Berlin and Washington cap in hand asking for funds to save their banks similarly when their unemployment level increased in Nevada because construction workers were unemployed after the collapse of the real estate market it was Social Security that immediately supplemented it from the federal budget, so the state of Nevada did not die if it were operating like Europe does, Greece would have been insolvent with Insolvent banks constantly seeking further extension and faking Ponzi. loans, so in Europe we have this situation and, well, given a healthy situation, we need it and I think all the member states of the eurozone, except maybe Germany, need more degrees of freedom, more fiscal space, so here is an idea that I had on how to create more tax funds. space even though we don't have a central bank and we were excluded from the money markets because our state was bankrupt, that's how we did it, it was an idea and then we reached the implementation to the level where we were almost ready.

Within three or four days of hitting the button and starting the system, the tax office, the IRS, our IRS has, of course, a website that you go to, it has your tax file number, your social security number, Get in there and see how. a lot of money, oh, and you make a transfer using web banking from your bank account so far, to the state, yes, like everywhere, the idea was to create a reserve account by tax file number and when the state tells you owes a lot of money. many people because they are bankrupt, including their own citizens, so it takes companies selling medicines, pharmaceuticals or general suppliers to the state 18 months before they get paid due to the lack of liquidity of the Greek state, so I said: "Well, imagine what we can say." We owe the businessmen a million dollars for the drugs they sold to a hospital, you can wait 18 months or I can put this money in your reserve account now, just write it down, it's just the zeros and the ones that go to this reserve account and I give you a PIN number because you can't withdraw this money because I don't have a central bank and I don't have the right to monetize anything, but I can give you a PIN number and you may owe money to someone else. from your suppliers and using that PIN number, you can transfer it to that tax file number and then the third party can use this money to pay me your taxes or you can give it to your workers or you know it can be an alternative. denominated in euros or dollars, what happened here, it is denominated in euros, so it is not another currency, but it uses its tax-backed liquidity that is created through the tax system and the idea here was to take it further even in Good times when a state doesn't.

I don't have a liquidity problem to use the same system but in a different way to tell people no, the state doesn't owe you money, but if you want us to put some money in that reserve account, we will, give me a thousand dollars . euros and I will do it now why would you want to give me a thousand years no why and entrust a thousand euros to the state when you don't owe the state anything and the state doesn't owe you anything Well, you will have to pay taxes next year, right? You have a car, you have a house, you have sales taxes and you may have to pay income taxes, all kinds of different taxes and fees.

Well, what if I told you? that this is this because it is digital material, it can have a timestamp and the system knows that if you have saved this money, you know that you bought it for me, you transfer real euros to the state. I put these numbers in your reserve account. sealed within a year I will give you a 10% discount for extinguishing taxes 10% of an interest rate in these times is huge, yes, and this is one way the state is a loan betweenpairs for the state between the citizens and the final state going through the bond markets and then you could develop it further.

You can have an app that allows you to go to the supermarket and use it to pay for things, since the supermarket will be able to use it for its own purposes. own suppliers and tax discounts, so this is if you want a parallel payment system that is purely digital and that gives more degrees of freedom to a fiscally stressed entity, be it a municipality, a eurozone country or even a community who wants to develop some payment system, a parallel payment system denominated in the same currency as the nation or bloc. Of course, I had additional incentive to do this when a guy named Alexis Tsipras, who later became my prime minister, started talking to me years ago about at the time I had no intention or interest or suspicion that I would ever get involved in politics.

I was just talking to him because I wanted to try some ideas he asked me I remember back in 2012-2013 because at that time the small political party that he led had 4%, it was three years later that we went from four to forty percent and a government 25 January of last year 2015 considering if we challenge the creditors and you tell them that the policies they are imposing on us are killing the cow that is supposed to produce the milk they want, so we are very interested in not killing the cow our country our economy our taxpayers our private sector and restart this Agreement what do you think is going to be the first challenge that we will face and I was very clear on this I told him I wrote to him In a memo from 2012-2013 I said that the first thing that will happen is that our banks will close or they will try to strangle us to succeed us and force us to retreat.

By the way, let me go now. to the future or the most recent past I became Minister of Finance on the 27th we want the elections for January 25th I became Minister of Finance on the 27th on the surface three long days later, by the way, another story embedded the first The day After I moved, on the 27th, I called a meeting of Treasury officials to ask them the pressing question: What is our funding? Now that is a very inauspicious start to a ministerial career for the Minister of Finance. Well, that happened at the service two days later, I had the president of the Eurogroup.

The Eurogroup is the body of finance ministers of the eurozone, as well as what we call it. the troika Christine Lagarde representing the International Monetary Fund Mario Draghi the president of the European Central Bank are fed and the representatives of the European Commission the president of this body a gentleman called Yeare ISIL Blum the finance minister of the Netherlands came to my office and lo and behold, it was as if at the right moment we had several meetings with caregivers and assistants and, you know, all those bureaucratic and boring things and the fun was when we met in my office just the two of us who had to get to know each other now in place a pleasure to meet you let's work together I have the following what do you intend to do with the program which is all science fiction the program the program are all the economic policies that were applied between 2010 and 2015 that led to the loss of 1/3 1/3 of nominal GDP in Greece, which is worse than the 1930s in the United States, so this program is the reason we were elected because the Greek people were fed up and we were elected. renegotiate it and I try to be as moderate as I can and I said: "you don't seem like", we were elected to challenge this problem but of course this is a program that the rest of the European Union is committed to, so, what's happening?

In a democracy, when you have two principles that clash, two programs of that kind, you sit down and find a compromise, so why don't we sit down and you know, the plan starts with a blank sheet of paper and we ask ourselves a very simple: how can we help? the Greek economy recovers in such a way as to allow the Greek people to regain hope and the creditors to recover some of their money because they left, there will be no money for you simply because the country will be dead, we will have created it. a desert and called it peace Roman empire of Tacitus and the answer was that if you insist on renegotiating the program, your banks will close on February 28, which was June 30, so what I said to suppress in 2012/13 happened on first of the third day of the third day at the end, the nearest banks bank them and overthrow the government, but these are not you, the Googlers, but I am trying to explain to you, remember the parallel payment system, the digital parable, the parallel payment that I was planning on this also being a way to create a system that would be functional and operational if the banks close, they are giving us the ability to maintain a semblance of normality in the economy, a transaction transit system that would survive, as well That the only reason I'm mentioning this is not just because I think it's topical, but because it speaks to what I was saying before that I think technological solutions, the digitization of money, is the way to go, but I ask you not to fall prey to the fantasy of political money or the fantasy that technology can eliminate the politics of money.

In this book I mention a scene from the House of Commons of the British Parliament where a woman whom I spent my youth despising and demonstrating again and again against the lady. Margaret Thatcher, a very right-wing politician and yet a politician who is on the last day of her term as Prime Minister, the day she was sacked by her own cabinet there was a coup d'état within the cabinet orchestrated by ministers who wanted Britain joined within a year and Thatcher opposed them tooth and nail and they overthrew her, so during the cabinet meeting that day it was clear to her that she was out of the people in the room.

I have friends who, when a friend who was in the room told me that It was the first time she shed a tear, she was visibly the Iron Lady broken, but then she regained her composure and went home, she was the prime minister and there a scheduled question time for the prime minister, but, of course, ever the news. she had spread that this was the last one and she let go, she allowed herself to enjoy her last appearance in the House of Commons as prime minister and a question from the opposition, a very stupid question from the opposition that is trying to undermine her and divide the Conservative Party Between those who wanted to join the UN and those who didn't want Thatcher, what did she think?

Why was she opposed to the idea of ​​a central bank that is outside the political process? The European Central Bank politicizes Europe's money and allows Europe to join in a monetary union without the money being in the hands of politicians and this pompous right-wing politician of that time said something that really appealed to me and still appeals to me. I think it was probably the most prescient and correct statement about money made by any European politician in the last thirty years. That doesn't mean I agree with everything else he did. I am still proud to have opposed a government.

I joined every protest I could find. The gangster who said. Who controls interest rates? Who controls monetary policy? in Europe controls Europe's politics that cannot be changed with technology, but a new form of progressive politics is needed along with a new innovative technological approach to digitize money and create parallel payment systems that provide maximum degrees of freedom to governments regional, municipalities and communities. I think the way forward and let me finish by saying that this idea has to have a global manifestation in 1944, somewhere in New Hampshire, Bretton Woods, there was a conference of 150 delegates who designed the postwar global plan, as I call it .

In the Bretton Woods system, as it is known, to which I dedicate a couple of chapters from my childhood in the book, the idea was to create a global monetary system with a surplus recycling mechanism very similar to the idea of ​​the New Deal, but applied on a global level a system that would find ways to take surpluses from the regions where they are produced and recycle them as productive investments in deficit regions, this is what happens in the United States when Boeing obtains a contract to build a new fighter plane the stipulation is yes, but we have to build a Greenfield factory in Arizona or in Missouri in a state that is depressed, not out of philanthropy like Missouri was, but that is the only way to guarantee that California and the state of Washington will continue to have its surplus if income is produced in Missouri through technologically advanced work that produces both skills and income, so that Missouri income can continue to purchase net exports within the California dollar zone in the state of Washington now, unless we find a way to return to the spirit of Bretton Woods, hopefully using technologies for a digital accounting system, a digital payments mechanism that will penalize both surpluses and deficits and redistribute surpluses to improve large imbalances between savings and investment on a global scale.

We are not going to face the challenges that the next generation faces both here and in Europe. Thanks, the growth of the overall economy seems to be based on population growth. Japan's GDP per capita actually continues to increase, and yet it doesn't. I see optimism in Japan and it seems that the reason is that the size of the economy as a whole is not continuing to grow. Japan is not in conflict due to population decline. Population decline and aging don't help. He's not happy, but that's not the reason. The reason Japan fell into this trap in the 1990s was because there was a huge bubble in the real estate sector;

That bubble burst after the market chords when the United States effectively forced Japan to overvalue itself to revive it and already overvalued the yen, which created a massive wave. of insolvencies in both the real estate and banking sectors, then the government for years tries to cover up the insolvency of the banks effectively turning them into zombies and when we get to 2008, when the rest of the economy fell off a cliff, the global economy fell fell off a cliff a net export-oriented economy like Japan simply managed to stand still and stagnate. Take Germany. Germany is also shrinking and also in the same demographic trap.

Japan's growth rate has been quite positive and quite optimistic. Now, of course, Germany itself is trapped. in the eurozone trap, but my opinion is that we should simply look at GDP per capita and there is nothing to prevent us from remaining perfectly optimistic and that savings and investment are balanced. There you need Japan for this, remember that I was talking about the gap between savings and investment is enormous in Japan Japan there is so much savings compared to investment that this gap for me this gap is the solvent of optimism it feeds negatively on optimism by creating pessimism and then the pest dormitory feeds on itself To maintain the gap between savings and investment, what Japan needs is to open its borders to immigrants, so why was this payment system that you developed even after the referendum not finally implemented who rejected the terms of the European Union?

Do you think Reese would be better? If it had been implemented well, it was just one of the projects that were in the lead during the five months that I was in government, where there was a period of conflict between us and the troika of lenders, it was a war that we lost and we lost it because Our side was divided with Alexis Tsipras. We had an agreement that if our banks were closed we would retaliate and we had leverage. We had a debt of 30 billion with the ECB, which if we restructured, we were perfectly within our legal right to do so. because it was Greek law, not American law, not British law, so this would bring down Draghi's entire QE program.

The drag knew that it would not have closed our banks if our threats to restructure the debt were credible, let that stop being credible when Alexis and I was disunited and when parts of the government, the deputy prime minister, to be precise, made a sign to drag it had done this job as if we wouldn't allow him to cut those bonuses, so the moment the other party realized that I wouldn't be allowed to use the liver at the head it was just a matter of waiting until he gave up and I hope that the referendum gave the prime minister energy to say press a button, it didn't happen that night he told me it's time to give up and I said no, it's time for you to give up and for me to resign and, of course, none of the other projects were carried out because from that moment on we have a troika government my colleagues my good friends we are still in the government we are not in power they simply govern on the basis of the email list they receive from Brussels, so I we ask some questions online because we have an audience that you know all over the world.

You have been a strong advocate of trying to fix theexperiment of the European Union rather than letting it collapse due to its poor design and the decisions of the European Union. group of non-democratic heroes how many countries will have to be sacrificed in this process. I hope none, as you see, this question has a false assumption built into it. The first assumption is that I am arguing that we should sacrifice some countries to save the rest. We have an organic vision of the European Union, the European Union either survives as a whole or collapses as a whole and if it collapses as a whole, if it is to the extent that we are going to have a repeat of the 1930s, there will be a rupture at along the Rhine River and through the Alps between northeastern Europe which will become a new deutsche mark zone that will be highly deflationary as a new deutsche mark soars and the rest of the Latin areas plus Greece will go through a shock of high inflation and high unemployment as their currencies split and no one will be safe from that, political monsters will arise when this happens because the conflicts will be great, the depression will spread from Greece to everywhere but things .

It started in Greece and spread throughout Europe the Cold War started in Greece the euro crisis started in Greece that this integration of the European Union has no beginning I don't know why we're, you know, kind of destined to be the harbinger of terrible things to come Okay and so, to conclude my answer to this question, right now we are sacrificing one nation after another, we are pushing them off the precipice of competitive austerity to preserve something that is disintegrating and that does not can be preserved. My suggestion is that we have a The choice is to eliminate the European Union or try to fix it for everyone.

Eliminating it will throw us off that cliff that meant the other cliff into the vortex of the 1930s. This is my estimate. I may be wrong. The alternative is, and you know, technically, it is very simple to economically stabilize the European Union in a way that no one is sacrificed. The problem is political will. This is where the easy disability is, the irreducibility of the policy and one more question, which is in retrospect or what was the best and what was the worst measure. You implemented that well as minister, the thing is that I did not have the opportunity to implement almost nothing, one of the reasons was that I had a lender on the other side doing this and saying do you dare to present something through Parliament. any bill without our approval would be just a kazoo and the end of the negotiations to believe that the only two bills that I promoted in Parliament had to do with what we call emergency measures against extreme poverty, so we effectively gave a credit card. prepaid credit card to 350,000 families who were below the lowest levels of extreme poverty and with it they were able to receive minimum energy supplies because their houses were disconnected from the electrical grid and some help with rent, this was what The only thing I tried to do and the second thing, which I think is much more significant, did not pass through Parliament because we were waiting for negotiation, was a plan to end the Greek crisis that was compiled together. with very capable people from this country and other places, so my team was made up of people like Jeffrey Sachs from Columbia, Larry Summers, who you've heard about like summers.

I think a former Conservative finance minister from England, a normal amount, Lamont, the former chief economist of the German bank that we killed. us for 3 or 4 months to come up with a plan for Greece, the recovery of Greece, ending the Greek crisis, having a fiscal plan, a plan for debt restructuring that would alleviate the pressures of unsustainable debt, but of a way that was not politically unfathomable for creditors and reforms for product markets for the pension fund industry and others. I am very proud of the document, the fact that it was not even discussed with the lenders because the lenders are simply dragging us through the mud until we were overthrown, that is another matter, but I still trust that that document will go down in history as an opportunity loss.

Hi, I'm from Athens and we have other Greeks so thanks for being here, I'm just going to ask about this payment system that you mentioned, how would you encourage people to transact on the system if they like to have faith in what supports the system, the Greek tax system and the Greek government, what they start with in the first phase, they would have no choice in the sense that you know they owe you a million. I don't have the money to give it to you in cash, so I tell you that here you have a million and you can use it to pay him.

Hey? And if she owes me money, if she owes me. money to the state and she does it because I am the state and she is a citizen, uh, or a businesswoman, and you can extinguish that debt and she can extinguish that tax, that to me that is all the incentive you need in the world , it is very efficient way of multilateral tax extinction for the extinction of the extinction yes, thank you, so it seems that the de novo of the referendum became a yes, a lot of what you were talking about was that tsipras felt like you could say forced to surrender, oh your phrase is so different that you could phrase it differently, but I wonder what the realistic maximum steps are at this point for Greece specifically.

I'm like I have family, they are less concerned about the rest of the eurozone and more specifically, but they can't afford to do that. This is because they can never be a Greek solution without a European solution, so is it necessary to take it to the next step, allowing it to reach a forced function point or is there something that can be more easily established in the near future? term that could avoid that force function point as you go. This is a very painful question for me and I will tell you why it is painful because we had the opportunity in 2015 to restart the loan agreement and we lost it because we were divided. and now we have signed a new agreement what we have signed the government in its game you only have to read the first page to despair and it is clear I mean recently WikiLeaks published a dialogue between two officials Thomson and Velasco of the IMF and they are telling each other what that I am telling you that this cannot work, it will not work, poor Greeks, the Europeans are squeezing you to the ground and the Europeans are forcing us to have the IMF squeeze you to the ground and this is simply terrible and we want to get out of this.

This is the IMF talking nice, so you don't have to take my word for it, so what do we do now? You see, that was a very important question I was asked after I resigned. Supporters were coming to me and putting a lot of pressure on me to start a political party and I just couldn't do it. What was I going to promise people that I would do what I couldn't do the first time? and anyway it's too late, now that the crisis has spread beyond Greece, we now have a massive fight between the German Finance Minister at the European Central Bank over negative interest rates.

I don't know if you have been following this, my hope and this is what I am doing and this is what I am applying all my efforts in DM, the movement for democracy in Europe. My hope is that what we started in Greece we can take to the rest of Europe because unless we restart European politics at the center with French participation German participation Italians, Spanish, Irish, etc., then it is impossible to restart Greece, which is why it sounds quite Desperate, I know, but it is the situation and there is no point in preventing our pragmatism from dominating.

Thank you, hello, thank you for coming. I have a more personal question for you, not about my shirts, but how did you do during this time? Probably, stress, pressure, deadlines, and difficulties somehow managed your process and were productive given what was happening around you. It's called adrenaline, it's adrenaline when you know that the phone kept ringing constantly and every phone call was a crisis that I hadn't predicted. Well, a funding crisis is usually something that, because when the system collapses, it's pure chaos, you know, non-linear mathematics, yeah, so it is. It's completely unpredictable what will happen here in the next second, so in the end it's adrenaline, a sense of responsibility.

See, my therapy was walking everywhere in Athens, so I didn't have guards or anything like that. I would walk to Parliament. I would walk to the Prime Minister's house or I would walk home from office or I would ride my motorcycle, but I usually walked just to mix with people who came and didn't agree with you Sadie, but to get their energy, this is what I really do. , this is what kept me alive and this is why. I couldn't not give up for July I thought why keep the chair I don't like this chair they took it away from the one I was in I was just happy in it when I felt it was a perspective to do something good to restart this situation thank you, thank you for coming first at the beginning of last year, when he started as finance minister, I got the impression that he was on a team with mr. tsipras that I was, you are a team together, you have the same thing pressing my head, yes, and when you resign and mr.

Tsipras remained there as prime minister. I got the impression that he gave up on you and I got the impression that he used you as a bluff against creditors, so my question to you is why did he give up? an answer to that I know, no I don't know, and you know what I am, the policy of not projecting my prejudices into another person's mind, the other mind, the problem in philosophy, especially in politics, is it wrong to do what I do what I can. job, what I can do is tell you what he has told me correctly because I think it is legitimate, but try to project my views about him onto him and then tell me what I think he was thinking.

I wouldn't do that to him. I will never do that, it's not productive, I don't believe and I don't trust myself to be able to do it, but look, Alexis allowed the troika, in particular the risk-taker Blum, the guy who had come to my office, and Merkel to drive a wedge . between us slowly at first and then we kept insisting until we were very distant there was a moment there were many moments I will not give you the precise details but at some point in late March beginning of April I began to feel that at the end of April We often faced with him, there was a moment when, for me, the unsustainable debt and our determination, when we were still as a team, not to accept another euro of debt unless we had stabilized the Greek debt made it sustainable and restarted the economic problem for Greece .

That was our agreement, yes, and technically speaking, a very important part of this agreement had to do with the primary surplus, the primary surplus, I remind you, is the difference between the government's tax collection and public spending, excluding debt payments, that is the primary surplus, now Petrarch. had imposed on Greece a crazy and insane objective: half the sin for four and a half percent of GDP in a bankrupt economy, that is any investor who sees that this is fine and leaves Greece alone because for them without credit there is no investment and the deflationary debt crisis can only try to achieve that primary surplus by increasing taxes year after year, so for me that number was important, it became substantially important and psychologically important to create a shock of optimism to reduce it to one per one hundred, one and a half percent maximum and see present had agreed that sometime end of April I am in his office I entered his office discuss various things that I could paste I could feel since the end of March there were problems between us the way he He was negotiating without me with Merkel and so on, what the doctor had told him was: look, get rid of Varoufakis and I'll make you a deal, it's very simple and that's not why they needed to get rid of me, it was very simple.

He had made it very clear. not sign a new bailout loan until and unless I could see that, then I put the numbers together and you know, it makes my day, you know, shoot me, I won't do it and I had. I had credibly committed to this so they would know. that they had to get rid of me, because all these agreements are not signed by the prime minister but by the finance minister, so I was an obstacle, well, then they opened this gap between us and I remember I walked to his office, it was the 27th of April. or something like that at that time there was a barrage of international and national internet press attacks against me and he went to the bathroom and there was a paper on the coffee table new topics that I read and I could see that he had given them three and a half for cent of the primary service and he comes back and I tell him Alexei, I understand that he gave me this without telling me because he knew that I would veto it, he said yes, so it was bad at some point.

I said you know well why he did that you know I can't support him he said be honest you have to become pragmatic you have to give something to take something I said okay what shall we take? We took it, they promised that they will give us something on the debt, something on the debt, what are they a data structure asset? Alexei, you're driving. I used words that I can'tuse now, we were friends, right, this is complete, let's see if you accept that you can achieve a primary surplus of 3.5% you are accepting that your debt is sustainable because you take the surface and give it to the creditors and then why do you they will give a data structure if you promise to give them that money then these are add-ons they are not something they are not competing with so if you give this, you give that its like giving a shark some blood to convince it to leave nowhere way and we had a big clash so the question is why didn't I resign that night well I wrote my resignation letter on the first one the second I wrote five I turned in the fifth the reason was because I'll tell you why because I felt that even though he was giving in They did everything they could to please the creditors, they didn't give him a deal, whatever he gave them, they wanted to drag a government through the mud as a demonstration effect for the spaniels, the Irish, the Portuguese, yes. you dare to elect the government like these people, this is what you should do. and I felt that when that degree of humiliation for Alexis reached a certain threshold, he would come back and give zakat malas Lina, that didn't happen, thank you and I think this is the perfect time to thank our guests today with this intimate story of how it happened so please lend a hand to mr.

Yanis Varoufakis