It’s Not Just Debt: Government Spending And Easy Money Fuel The Greek Crisis

It’s Not Just Debt: Government Spending And Easy Money Fuel The Greek Crisis by Frank Shostak, Mises Institute

The Greek government continues to negotiate with international creditors following its recent default on its 1.6 billion euro loan repayment to the International Monetary Fund (IMF).

Consequently, Greece runs the risk of losing access to a 1.8 billion euro loan tranche and 10.0 billion euros for recapitalizing banks.

Commentators are of the view that the key factor behind the troubles in Greece is high government debt, which as a percentage of GDP stood at over 177 percent in 2014 against 79.6 percent in 1990.

But it is not debt as such that...