The standard Krugman/Keynsian style argument is, that Greece should use inflation (but can not, since they do not have control over their money). And note, the

The standard Krugman/Keynsian style argument is, that Greece should use inflation (but can not, since they do not have control over their money). And note, the more a country is indebted, the harder it becomes to get the deficit under control using austerity. The reason is, that you need to cut expenses in such a way, that GDP is not stronger affected by the cuts. For example, a country which has a dept/GDP ratio of 50% needs to cut its expenses such that the GDP is not reduced by more than twice the cuts in order to reduce its dept/GDP ratio. ( The multiplier for the austerity program needs to be smaller than two.) On the other hand, if it manages to have a stimulus program with a multiplier larger than two, then it can reduce its dept/GDP ratio using this stimulus program. For 100% the critical multiplier is 1 and in general it is 1/R, where R is the dept to GDP ratio.) So you need less and less effective stimuli programs, the higher the dept to GDP ratio is. ( And I do not know if anyone does claim that dept-financed stimulus is the cure for any economic ill. But if not enough money is the problem, one can simply print that stuff.)