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The Greek can do anything they want. They merely need to find someone who borrows them the money.

mmanfrin 11y ago
Sorta like the US has been able to do with the Fed? The difference is that the monetary policy of the ECB has been much tighter than it needed to be, and that caused ripple panics through lenders about solvency. This didn't happen to the US or Britain because there was never any doubt of solvency, just value (don't want to quantitatively ease to the point of rapid inflation). However, we're at a point where economists are arguing for more inflation in the Eurozone -- which would have fit nicely with the Greek situation. In the end, this is a case of Germans wanting their money to be worth more abroad, and this has caused Greece harm.
- SovietDissident 11y ago
  The U.S. can get away with our inflationary monetary policy shenanigans because we (still) have legacy reserve currency status in the world. Currently, banks are being paid interest to keep money in government coffers, so they have no interest in lending it (the economy is also weak, which is likely a factor as well). We do have inflationary pressure in the U.S., which is probably underreported due to the CPI being taken out of official figures. In the event that there was meaningful GDP growth in the U.S., high inflation would likely be part and parcel. If we didn't have carte blanche in terms of printing all the money we wanted, the pressure would be all on fiscal policy, as it is in Greece. An apt comparison could be U.S. state governments, where they must maintain a balanced budget. Either you can inflate your currency (which destroys savings), you can increase taxes (which negatively affects growth), or you can cut spending to actually match what comes in. The U.S. has the luxury to do the former for a while thanks to rational monetary and fiscal policy (long) in our past and the fact that our economy is still relatively productive. We are living on borrowed time in this regard. Greece does not have the luxury, and has reached the inevitable end of collectivist economic policy.
coldtea 11y ago
Actually they're not "free to do anything they want", as the sanest options (those which most foreign economists advised from the start), such as defaulting and/or cutting part of the debt were taken off the table by threats and diplomatic and political pressure.

Sorta like the US has been able to do with the Fed? The difference is that the monetary policy of the ECB has been much tighter than it needed to be, and that caused ripple panics through lenders about solvency. This didn't happen to the US or Britain because there was never any doubt of solvency, just value (don't want to quantitatively ease to the point of rapid inflation). However, we're at a point where economists are arguing for more inflation in the Eurozone -- which would have fit nicely with the Greek situation. In the end, this is a case of Germans wanting their money to be worth more abroad, and this has caused Greece harm.

SovietDissident 11y ago
The U.S. can get away with our inflationary monetary policy shenanigans because we (still) have legacy reserve currency status in the world. Currently, banks are being paid interest to keep money in government coffers, so they have no interest in lending it (the economy is also weak, which is likely a factor as well). We do have inflationary pressure in the U.S., which is probably underreported due to the CPI being taken out of official figures. In the event that there was meaningful GDP growth in the U.S., high inflation would likely be part and parcel. If we didn't have carte blanche in terms of printing all the money we wanted, the pressure would be all on fiscal policy, as it is in Greece. An apt comparison could be U.S. state governments, where they must maintain a balanced budget. Either you can inflate your currency (which destroys savings), you can increase taxes (which negatively affects growth), or you can cut spending to actually match what comes in. The U.S. has the luxury to do the former for a while thanks to rational monetary and fiscal policy (long) in our past and the fact that our economy is still relatively productive. We are living on borrowed time in this regard. Greece does not have the luxury, and has reached the inevitable end of collectivist economic policy.

coldtea 11y ago

Actually they're not "free to do anything they want", as the sanest options (those which most foreign economists advised from the start), such as defaulting and/or cutting part of the debt were taken off the table by threats and diplomatic and political pressure.