On the face of it, Greeks are some of the most industrious people in the world. Almost a third of the work force is self-employed. That’s double the average of other Europeans who strike out on their own, and far above America’s 7%.

But for all of their ambitions and effort, these same Greeks appear to be very bad at money management.

According to their personal income tax filings, on average self-employed Greeks spend 82% of their income on debt service, paying for things like cars and homes.

For comparison, the rule of thumb in the U.S. is that debt service should take up no more than 30% of income. After all, people have to eat, buy gas, pay for clothes, etc.

In Greece, the problem gets worse when we look at individual sectors. Ironically, business owners in accounting and finance manage to spend 115% of their income on debt service, making them the worst money managers in the bunch. Other professionals who spend over 100% of their income on debt work in medicine, lodging, retail, and transportation.

Before you shed a tear for these hard-working souls that can’t seem to get ahead, you should know something: no one believes they’re telling the truth, particularly their banks and the government.

The taxpayers lie to avoid taxes, and the effort to catch them sheds light on why bitcoin won’t survive in its current form.

Like bankers everywhere, Greek bankers have to lend to make money. If they avoided all the self-starters who claim exceptionally low incomes to avoid taxes, then they would miss lucrative sections of the market.

So they did what any reasonable banker would do: they created their own model for estimating a person’s real income based on what they reported to the government.

This approach proved so accurate that a group of academic researchers were able to use the data to determine how much tax revenue these professionals were withholding from the state. In 2009, the number was 11 billion euro, or roughly 12% of Greek tax revenue for the year.

This goes a long way in explaining why Greece focuses so much effort on curbing tax evasion. The practice is driving the country to the poor house.

To combat it, a recent article suggests the government wants to drastically reduce the amount of cash that pensioners and civil servants can withdraw from banks. Instead, they would have to use debit and credit cards to spend.

It’s not that pensioners and civil servants are the ones guilty of tax evasion. The goal is to track funds flowing to service providers, like doctors and restaurants, who are among the worst tax evaders.

Whether true or not, the proposal sounds reasonable. The government simply wants to stop an illegal practice that places a higher burden on those that follow the rules.

But that ignores part of what drove tax evasion to such large levels in the first place. Constituents see the government as corrupt, with government officials demanding bribes before they’ll perform their duties. Even tax enforcement officials had a bribe schedule, highlighting what size of the bribe was required to get a tax liability reduced. In such a system, citizens that don’t evade taxes provide a free ride for all others.

Breaking the cycle requires a transformative change, like forcing most transactions through the banking system where they can be tracked. The government needs to know who has funds and where they are spent.

This is the antithesis of bitcoin, a system that prizes anonymity and ease of transfer around the world without banks or government interference.

The digital currency has become popular in Greece with tax evaders looking for an easy way to remain anonymous, and regular citizens concerned over the state of the country’s currency. If countries allow their citizens to move funds from the banking system to bitcoin, then wealth holders can choose what they report. It would completely undermine the government’s efforts to track the funds it’s losing.

Without transparency through official channels such as the Federal Reserve or the Office of Thrift Supervision – or the ability of the FBI, the IRS, or even local police to review accounts – using bitcoin, individuals and businesses can hide any and all transactions and transfers. This makes tax evasion and illicit activity easy. It doesn’t mean everyone will do it, just that it’s simpler.

But there doesn’t have to be an intent to break the law to make bitcoin tough for the government to swallow.

Another aspect of the Greek proposal is that funds previously withdrawn from banks now remain on their books. This recapitalizes banks using none of the government’s resources, and insures them larger deposit balances. That’s a great deal for banks, particularly if they are at risk of insolvency.

Right now savers can move their wealth to bitcoin at a moment’s notice. If bitcoin gained wide acceptance and banks started to falter, it would make sense for people to move more assets to bitcoin. This would only quicken the demise of banks, creating a self-fulfilling prophecy.

No matter how good this would be for individuals, it’s hard to see how it would be good for the government.

There is a way for bitcoin to counter at least part of these problems – provide records of ownership and transactions to bank regulators.

Of course, this ruins one of the main selling points of the digital currency, and flies in the face of why most owners use bitcoin in the first place.

It sort of reminds me of the old Woody Allen quote: “I’d never join a club that would have me as a member."

Rodney