Dimitra and Persephone

Walter Heller, an economist who served in the Kennedy and Johnson administrations, used to quip that "an economist is a man who, when he finds something works in practice, wonders if it works in theory." Yanis Varoufakis, Greece's former finance minister and now leader of the MeRA25 political party must be a great economist considering that he wants to replace the euro, a currency which actually works, with his Dimitra blueprint that only exists in theory.

Truth is there is a big theoretical debate about the role of currencies in the economy, which has gained additional interest now that the operation of banks is governed by fewer rules than in the past. The liquidity produced by central banks is several times smaller than that produced by private credit. In the past, this extra liquidity was defined by law as a multiple of the banks' state-held liquidity, which refers to...