CASE STUDY: Dionysius’ miracle of multiplied coins needed again

«The year was around 400 B.C.; Plato was an up-and-coming young philosopher; and Dionysius of Syracuse (Yes, Syracuse is in present-day Sicily, but it was a Greek city at the time.), a noted tyrant, had a problem: He’d borrowed too much money from his subjects.

Dionysius’s solution was to appeal to the solidarity of tribes all across Europe to pool their money into a giant pot that would repay Dionysius’s debts.

Not really. Actually, Dionysius ordered all money handed over to the government upon pain of death. He then reminted every coin, turning each one-drachma coin into a two-drachmae coin. The tyrant was then able to pay all his debts in full; maybe no one noticed that the real value of the coinage had been halved.

If that’s the kind of decisive policy that investors are looking for to solve the euro-zone debt crisis, the Lisbon Treaty will need a few amendments.

It should be noted that Dionysius enjoyed several advantages over the contemporary Greek state. First, he was a tyrant and could largely do what he liked. Second, all his debts were domestically held. He hadn’t borrowed money from barbarian tribes in the northern wilderness, for example. The Greek government, on the other hand, has creditors scattered across the euro zone.»

An Ancient Greek Debt Solution, D. J. Matthew Dalton, WSJ