Democratic Underground Latest Greatest Lobby Journals Search Options Help Login

Learning From Greece (Paul Krugman)

Printer-friendly format Printer-friendly format
Printer-friendly format Email this thread to a friend
Printer-friendly format Bookmark this thread
This topic is archived.
Home » Discuss » Topic Forums » Economy Donate to DU
Dover Donating Member (1000+ posts) Send PM | Profile | Ignore Sat Apr-10-10 12:14 PM
Original message
Learning From Greece (Paul Krugman)
April 9, 2010
Op-Ed Columnist
Learning From Greece

The debt crisis in Greece is approaching the point of no return. As prospects for a rescue plan seem to be fading, largely thanks to German obduracy, nervous investors have driven interest rates on Greek government bonds sky-high, sharply raising the countrys borrowing costs. This will push Greece even deeper into debt, further undermining confidence. At this point its hard to see how the nation can escape from this death spiral into default.

Its a terrible story, and clearly an object lesson for the rest of us. But an object lesson in what, exactly?

Yes, Greece is paying the price for past fiscal irresponsibility. Yet thats by no means the whole story. The Greek tragedy also illustrates the extreme danger posed by a deflationary monetary policy. And thats a lesson one hopes American policy makers will take to heart.

The key thing to understand about Greeces predicament is that its not just a matter of excessive debt. Greeces public debt, at 113 percent of G.D.P., is indeed high, but other countries have dealt with similar levels of debt without crisis. For example, in 1946, the United States, having just emerged from World War II, had federal debt equal to 122 percent of G.D.P. Yet investors were relaxed, and rightly so: Over the next decade the ratio of U.S. debt to G.D.P. was cut nearly in half, easing any concerns people might have had about our ability to pay what we owed. And debt as a percentage of G.D.P. continued to fall in the decades that followed, hitting a low of 33 percent in 1981.

So how did the U.S. government manage to pay off its wartime debt? Actually, it didnt...cont'd
Printer Friendly | Permalink |  | Top
ixion Donating Member (1000+ posts) Send PM | Profile | Ignore Sat Apr-10-10 03:53 PM
Response to Original message
1. Too late...
we're already walkin' that path...
Printer Friendly | Permalink |  | Top
whattheidonot Donating Member (301 posts) Send PM | Profile | Ignore Sun Apr-11-10 12:58 PM
Response to Original message
2. fat cats.
the fat cats in charge do not want any inflation, all others be damned. Even with little sign of inflation employment and wages are going slow. The Fed can change this but they do not. They are controlled by big money and the president has not put the big heat on them . the people are going to have to make the changes. do not deal with big banks and do not buy from big companies. start co-ops , eliminate middlemen, deal with locals,use small banks etc. good article about this on
Printer Friendly | Permalink |  | Top
DU AdBot (1000+ posts) Click to send private message to this author Click to view 
this author's profile Click to add 
this author to your buddy list Click to add 
this author to your Ignore list Sun May 19th 2024, 12:11 AM
Response to Original message
Advertisements [?]

Home » Discuss » Topic Forums » Economy Donate to DU

Powered by DCForum+ Version 1.1 Copyright 1997-2002
Software has been extensively modified by the DU administrators

Important Notices: By participating on this discussion board, visitors agree to abide by the rules outlined on our Rules page. Messages posted on the Democratic Underground Discussion Forums are the opinions of the individuals who post them, and do not necessarily represent the opinions of Democratic Underground, LLC.

Home  |  Discussion Forums  |  Journals |  Store  |  Donate

About DU  |  Contact Us  |  Privacy Policy

Got a message for Democratic Underground? Click here to send us a message.

© 2001 - 2011 Democratic Underground, LLC