Mexico City, July 25, 2012.
Mr. Alexis Tsipras
Dear Mr. Tsipras:
Greetings! My name is Hugo Salinas Price; I am a Mexican citizen and retired entrepreneur who lives in Mexico City. In 1996, during my retirement, I founded the Mexican Civic Association Pro Silver, of which I am President.
Since 2002 this Association has been lobbying the Mexican Congress for approval of a law to introduce into circulation a silver coin which the population might use as money, in parallel with the Peso - our current money. Later on, I shall mention the fundamental bases for this plan and the reasons for which I consider that this plan might be of great utility for you and for Greece.
This proposal gathered much support on the part of Mexicans and legislators of all political parties in the Mexican Congress, during three successive legislative periods since 2002; several times we were near to its approval, although in the last moments the project was turned down - without ever coming to a vote - due to opposition from the Mexican Central Bank.
During the first days of June this year, while on a trip to Europe, I travelled to Athens with Mr. Max Keiser and his colleague, Ms. Stacy Herbert. The purpose of our visit to Greece, which was unplanned, was to speak with you on a subject which we consider important for your country; unfortunately, it was not possible to meet with you, because you were occupied with affairs regarding national elections at hand.
If we had had the opportunity to speak with you, Max and I would have told you that we thought it quite evident that Greece would have to declare itself in bankruptcy and abandon the Euro system. Max and I spoke with several Greek friends who are well-informed regarding the situation, and they told us that you could not express such an opinion at that time, because of the approaching elections.
However, now I see that you have publicly declared that the return of the Drachma is inevitable, and that is why I write.
This is what I wish to communicate to you:
Mr. Tsipras, the desperate situation of Greece offers you a unique opportunity to do something fundamentally great for Greece and to establish yourself as a great national leader. You are a young man and thanks to this, you have a brilliant opportunity to build a long career as a Statesman - not as a politician, but as a Statesman.
En effect, the return of the Drachma would allow Greece to pull itself together once more. It would definitely not make matters worse, for the present situation is so bad that the Drachma will give Greece an immediate respite.
Thus, the monetary heart of Greece would once again begin to beat and furnish the necessary liquidity to get the economy "moving" again.
However, this measure will inevitably entail monetary inflation through the creation of increasing amounts of Drachma to cover the budget deficits of the Greek government for some time, and the inflation will bring about the constant devaluation of the Drachma.
This will allow the renovation of Greek exports and a rebirth of Tourism to Greece, since Europeans will prefer to travel to Greece due to the advantages which the rate of exchange with the Drachma will offer.
However, it is clear that a permanent inflation cannot be acceptable and cannot offer political stability for Greece.
It is on this point, that I present to your government an alternative that no "accredited" economist has had the will, or the necessary understanding of human affairs to consider.
All "accredited" economists in the world will say that the Government of Greece should "eliminate the fiscal deficit" to put a stop to pernicious inflation. However, these economists are not in Government; they are not politicians or Statesmen and they ignore the huge problem of convincing a population accustomed to spending, to save money. The keynesians, who are the majority of economists today, detest the idea that the population should save; they attempt to solve all problems by increasing spending, until finally the whole economy collapses. The Greek economy has collapsed because the money to spend, which came from foreign loans in Euros, has finally dried up: there is no more money to spend.
Mr. Tsipras, the way to lead the Greek people to stability is through real money, and not through fictitious money such as the Euro, which has led to the present chaos. The present European disaster was guaranteed from the day of birth of the Euro as a fictitious - fiat - money, of a symbolic nature, and not real money.
It will be only by giving Greeks a silver coin in parallel with the Drachma, that you and your Party may gradually lead Greece to fiscal equilibrium. Your government will have to modify profoundly the mentality of the Greeks, before achieving this goal. Let us think of all the great leaders the world has seen, and we shall see that all of them governed by means of the ideas which they inspired in their nations.
With a silver coin in their power, Greeks will feel an enormous pride in Greece and there will be a renewed hope of a better future, a condition which is indispensable in order to achieve a recovery. Modern "economists" never mention "pride" and "hope" as important factors in economic matters. And, of course they are supremely important!
Thanks to a renewed pride and hope, Greeks will be better disposed to accept the measures which your government may wish to implement, and to tolerate the difficult transition to fiscal balance; a period during which your government will have to control gradually the level of expenditures and government investment, until a sustainable level is attained.
Not only this: the conservative sector of your population - for whom you will also have to govern - will watch the continual devaluation of the Drachma (necessary as a part of government planning) with disapproval, and will strive to remove you from your position, unless they see in you the Statesman that has given Greece a silver coin, which may be used by those who wish to protect their savings, and who will, in the main, be conservatives. Thus, the conservatives will want to see you remain in power, so that you may continue your policy of placing silver money in the hands of Greeks.
The silver coin in parallel with the Drachma is the formula for national unity and reconstruction. The reconstruction of Greece will require of savings and nothing furthers saving more efficiently that silver money.
How can a silver coin be put into circulation in Greece?
I outline the basic principles:
1. The silver coin will circulate in parallel with the Drachma. The Drachma will remain the monetary unit of Greece. The silver coin will have a monetary value expressed in Drachmas. (Note as of March 17, 2015: Alternatively, the silver coin might have a monetary value expressed in terms of the Euro or of the Dollar.)
2 . Greece will coin a small silver coin, using the Greek symbols: Athene on one side, with the Owl on the other, following a tradition of thousands of years.
3. This small coin - the "Owl" - will contain 1/10 of a Troy ounce of silver, alloyed with copper to .9166 to give it hardness.
4. This coin will be assigned a monetary value by the Monetary Authority, which shall be preferably, the Greek Treasury. This coin will bear no engraved value; otherwise, the coin will go out of circulation immediately as the price of silver rises, whether in Drachma, in Euros or in Dollars. (This phenomenon caused the disappearance of silver money from circulation in the world, in the course of the XXth Century).
5. The monetary value which is assigned to the coin shall be slightly higher than the value of the silver contained in the coin. This condition is necessary, to keep the coin in circulation and prevent its being melted down for a higher value in silver, than its value as Greek money.
6. Whenever the price of silver rises, the Monetary Authority will raise the monetary value of the coin, to a point always slightly higher than the value of the silver contained in the coin.
7. However, if the price of silver falls, the Monetary Authority will retain the last value assigned to the coin. All experience has shown, that a population does not fear falls in the value of silver contained in a silver coin.
8. The population will retain these coins as savings; these will not be susceptible to deposit in the banking system; there will be no "Silver Owl" bank accounts.
9. The banks may establish "Custody Accounts" for the public who wishes to store their "Owls" in a safe place. This will be a storage service, and the coins will remain the property of the owner of a Custody Account.
10. The public may carry out payments either in Drachmas or in "Owls" according to their monetary value. Most Greeks will retain "Owls" in savings, and spend their drachmas - "Gresham's Law".
There, in one page, you have the essentials of a formula to revive Greece and the Spirit of Greece.
I also can foresee that the Greek coin, the "Owl", of 1/10 of a Troy ounce of silver, will become much more desirable on the part of Greeks, than any foreign currency. Your government will have no further problems with "Capital Flight", because Greeks will prefer to own "Owls" rather than any other foreign currency. And banks will have no need to offer high interest rates to attract savings; the silver coin will be so desirable that people will save it simply for its superior quality and future rise in value.
Nor will the Greeks be the only ones to wish to own "Owls"; all of Europe, which uses no silver, will want them. Thus Greece will receive Capital from Europe, for the purchase of "Owls": the purchase of silver is subject to taxation, but the purchase of silver coins that are money is tax-free.
(Note as of March 17, 2015: The Greek Government may opt to receive silver objects from individuals, to be returned to them in the form of "Owls". Thus assisting the economic recovery.)
Mr. Tsipras: Can you imagine the power that this new joy and pride in being Greek and having such a superior money, will bring to your government?
As you can see, we are here not talking about "economics", we are talking about the fundamental levers that motivate human beings, levers that have always and everywhere produced great deeds in past ages, and that we, humans of this age, have forgotten while absorbed in electronic fantasies.
I have here outlined the bases to introduce a silver coin that may circulate in parallel with the Drachma.
I have attempted to convince you that this is a plan that you can follow, on your road to greatness as a Statesman who re-established prosperity and joy in his country.
If you desire to speak with me, I am at your service.
With great respect, I am, yours truly,
Hugo Salinas Price
Mexican Civic Association Pro Silver, A.C.
(Published in Spanish at www.plata.com.mx, February 23, 2015)