We’re not talking monetary theory anymore. We’re talking actual government wages:
“”The Portuguese government is considering a plan to pay
public workers and pensioners one month of their salary in treasury
bills rather than cash after a high court ruled out wage cuts, a person
familiar with the situation said Sunday.
“This is one of the ideas being considered,” the person said.
By paying one month of salary in T-bills to public workers and
pensioners, the government would save an estimated €1.1 billion in
expenses, narrowing the budget gap significantly.”
Incidentally, this plan makes perfect sense: with every central bank
openly monetizing its debt, it has effectively made debt and cash
Things are rapidly getting very weird in the economic sense. Cyprus. Ireland. Portugal. And having driven away its high-income earners, France is showing signs of attempting to expand its tax reach beyond its borders. Paul Krugman is praising capital controls.
And, as Karl Denninger points out, it probably won’t be long before the federal government uses the insolvency of the state and local pension plans to make a play for seizing all those luscious, previously untaxed assets in millions of retirement plans.