GREEK DEBT CRİSES

One of the great rules of economics is if you are rich you have to be an idiot not the stay rich and if you are poor you have to be really smart to get rich. This is true for individuals but is also true for countries. Fancy pants countries with fancy pants currencies have all kinds of advantages over developing countries including they are able to borrow money cheaply. İn fact because fancy pants countries can borrow money so cheaply its actually often make sense run a deficit the reason for this long term its economy grow faster cheap cheap debt requiring pay for its economy to grow.

So debt is not bad for nations. The famous example of this in 1945 United States had a debt more than %100 of its GDP(GDP is notions total economic output) and its deficit more than %20 of its GDP (which is really high) and that level of debt immediately started largest expansion of its economy in history. So debt is not bad. But debt that you cannot repay is very bad. The trick of fancy pants countries being able to borrow money cheaply has always been to market assumes that fancy pants countries basically guarantee pay you back. And when İ said market assume I mean market assumed until when it realized Greece fancy pants country with a fancy pant currency maybe can't pay back its debts. For variety of reason market is decided that Greece won’t be able to pay its debt which is turn that new debt being much more expensive which has turn made completely impossible for Greece ever pay its debt. You see it’s a circle.

This raises possibility that fancy pants countries with fancy pants currencies might not pay back money we loan them. Which will probably raises interest rates for a lot of fancy pants countries which could lead viscous circle more deep higher interest rates more deep higher interest rates i can go like this forever. Which would be very bad? Like we will end the day %10 percent of unemployment all which is complicated by the fact we are coming world recession total economic output in the world smaller. So there is less money coming in taxes but government still need to spend approximately same amount of money. United States will have to eliminate both of its two biggest expense social security and defense in order to even come close to balancing the budget. The only other way to shrink deficit would be raises taxes which is not seen a good idea during recession.