Thinking Ahead of the Next Big Crash: Clues From Athens in Classical Times

28 Pages Posted: 10 Jul 2020

See all articles by Georgios (George) C. Bitros

Georgios (George) C. Bitros

Athens University of Economics and Business - Department of Economics

Date Written: June 16, 2020

Abstract

Credible analyses and evidence submitted by experts from universities, international organizations and independent think tanks show that the trends which led to the 2008 worldwide financial crisis remain intact. As a result, central for responsible leaderships should be the concern how to forestall the next big one which might prove uncontrollable. Given the world dominance of the U.S. dollar, in a 2015 paper I discussed two paths of possible reforms: One bold but gradual, which would entail altering the present institutional setup of the U.S. Federal Open Market Committee (“the Fed”), provided that it maintains control over the Federal Funds Rate (FFR); and, if not, a radical one, which would entail replacing the Fed with a monetary regime based on free banking. In this paper I go a step further in the latter direction by drawing on the model of free banking that emerged in Athens in classical times and enabled the Athenian “empire” to turn the Attic drachma into the dollar of today, throughout the eastern Mediterranean and beyond, without causing major financial crises for over two centuries. More specifically, I argue that, even if the said model had not proved its potential as a highly successful historical precedent, as banker of the world, the U.S. ought to consider it as a benchmark for reference and adaptation, before an unexpected international financial crisis and/or the revolutionary technological developments in the front of gold-like digital currencies, precipitate a monetary regime change.

Keywords: Classical Athens, Democracy, Central Banks, Free Banking, Athenian Model of Money and Banking

JEL Classification: D7, E4, E5, E6, G2, N4

Suggested Citation

Bitros, Georgios (George) C., Thinking Ahead of the Next Big Crash: Clues From Athens in Classical Times (June 16, 2020). Available at SSRN: https://ssrn.com/abstract=3630137 or http://dx.doi.org/10.2139/ssrn.3630137

Georgios (George) C. Bitros (Contact Author)

Athens University of Economics and Business - Department of Economics ( email )

76 Patission Street
Athens, 10434
Greece
030 210 8203740 (Phone)
030 210 8070545 (Fax)

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