It was a dark and stormy night when the Euro Zombie first appeared, and had been that way for some time. The lightening and thunder of emergency bailouts and economic crisis summits seemed to be everywhere. The truth is that things had been circling the European economic drain hole a lot longer than anybody wanted to admit and a sunny forecast was nowhere on the horizon.
It seemed like just yesterday that the euro was a happy healthy currency with it’s coins and notes that functioned like normal currencies, facilitating commerce and acting as an accepted medium of exchange. Then came the tell tale signs that something was wrong with some of its members, Portugal, Ireland, Italy, Greece and Spain. There were those that even referred to them with the unflattering acronym of “PIIGS”. The euro began to develop the blank stare and stilted walk of a zombie currency.
Now when a transaction is made it is accompanied with a certain amount of grumbling. You see, there is suspicion that the euro is becoming something else, something to be feared. Feared because the zombie currency jeopardizes the euro as a store of value. Even now there are accounts that oil merchants are hesitant to provide their product to Greece. They worry that a few months down the road, when the payment comes due, they may not be paid with euros but with resurrected Drachmas, worth far less. Rumors persist that Spain is next.
When a currency gets “zombified”, the harm to the system is almost instantaneous as trade ceases, investments are put off, and money seeks refuge. Currently, well to do property buyers are harassing London real estate agents, looking for somewhere to protect their money. Swiss banks are well stocked with cash leaving Italy and Germany. Those with large amounts of cash are desperate to get at least a portion of it outside the euro zone for fear the euro zombie will collapse. Did someone say “gold?”
Sadly, this is the fated path of all fiat currencies. This is not the fault of fiat currencies but of politicians and governments that cannot keep themselves from misusing the system. Thomas Jefferson lamented, “Paper money has been abused in every country it has been permitted.”
Another voice, that of Professor Alexander Tytler over 200 years ago said, “A democracy cannot exist as a permanent form of government. It can only exist until the voters discover that they can vote themselves largesse from the public treasury. From that moment on, the majority always votes for the candidates promising the most benefits from the public treasury, with the result that a democracy always collapses over loose fiscal policy, always followed by a dictatorship.”
The real scary part, dear reader, is that these dark clouds are globally present and this mutation of currency could happen anywhere, changing even your own currency into something like a Euro zombie.