I'm no economist, but it seems to me that in the example, the debt owed by the whole vilage to the outside world is essentially zero. The problem described is a

I'm no economist, but it seems to me that in the example, the debt owed by the whole vilage to the outside world is essentially zero. The problem described is a liquidity problem much more than a debt problem. We could in theory imagine the villagers to trust each other enough to trade the IOUs between each other and solve the problem without the rich german. For example if A owes 100 to B who owes 100 to C who owes 100 to A, then A could give C's IOU to B and have his debt cleared B would then give C's IOU to C in exchange of his own bieng returned. No more debt and no germans involved. However this assumes that B trusts C enough to accept his IOU as payement from A. If we were to use the analogy In the case of Grece, the hotel owner would owe a few thousand euros to different pawnbrokers in nearby villages, rush to pay them, and the german is in for a nasty surprise after he's done inspecting the rooms. Not that he wasnt expecting it to happen when he put a note on the table or that losing the 100 euros is such a big deal to him. As I said I'm no specialist so I may be wrong here.