Imagine writing an ‘I owe you’ note that people would accept them for whatever you wanted – in pubs , as payment for your car , or even as a downpayment on a property in Dublin 4. In your dreams , imagine that people trusted you enough that they would then use your IOU’s in shops as payment. This is even better, as people now want more of your IOU’s, so you can write even more of them and get even more free stuff.
This is fantastic – you’ve got a massive free loan. Best of all many of these IOUs will get lost behind the sofa or eaten by the cat so you’ll never have to pay them back. Free money. The situation is not so absurd as it seems : The 50 Euro note in your pocket is an IOU from the Irish (and other European) governments. Technically we can reclaim payment, but what would be paid in?
What has sparked this ‘free money’ post is the news from the Financial times is that the Euro has edged out the US Dollar as the international IOU of choice. Given that the Irish Government is allowed to issue a fixed percentage of the Euro in circulation, the Irish Government now has even more money in it’s coffers ahead of the next election.