US Can Avoid Greek-like Debt Crisis by ‘Printing Money’

© Flickr / reynermediaA lot of dollars
A lot of dollars - Sputnik International
Experts claim that the United States is unlikely to become the next Greece given that US debt is largely held in US dollars, which affords Washington the luxury of repaying creditors by revving up the printing press at the Treasury Department.

WASHINGTON (Sputnik) — The United States is unlikely to become the next Greece given that US debt is largely held in US dollars, which affords Washington the luxury of repaying creditors by revving up the printing press at the Treasury Department, experts told Sputnik.

“The big difference between Greece and the United States is that the US debt is in the US currency, and so it can be repaid by ‘printing’ money,” Sauder School of Business Professor Maurice Levi told Sputnik.

A man passes graffiti in Athens, Tuesday, July 7, 2015. Greek Prime Minister Alexis Tsipras was heading Tuesday to Brussels for an emergency meeting of eurozone leaders, where he will try to use a resounding referendum victory to eke out concessions from European creditors over a bailout for the crisis-ridden country - Sputnik International
UK Prime Minister Backs IMF Proposal on Greek Debt Relief
Greece owes $270 billion to its international creditors, including the International Monetary Fund (IMF), the European Central Bank (ECB) and some Eurozone states, but it has already defaulted on its loan to the IMF.

The holders of debt in both cases lose, Sauder explained, but Greek creditors lose via default while US creditors lose via currency deprecation.

Georgetown Law Professor Anna Gelpern, who has served in legal and policy positions at the US Treasury Department, told Sputnik that the US ability to reproduce its own money is just one of several factors that differentiate it from Greece.

Gelpern noted that not only does the United States print its own money, but other countries save and trade in US dollars because it is considered a “global reserve currency.”

Other factors, Gelpern argued, include the fact that the United States has a relatively healthy financial sector and a massive and expanding economy.

New Jersey Institute of Technology School of Management Finance Professor Michael Ehrlich told Sputnik that the United States has more tools and flexibility than Greece when facing economic issues, including the ability to print more money, devalue currency and change terms of trade.

“What is really hurting Greece is that they have their debt in euros, but they don’t really control the currency… so they can’t adjust the currency to accommodate their domestic economy,” Ehrlich explained.

Major stable countries like China and Brazil that hold a significant amount of US debt see the United States as “too big to fail,” Ehrlich claimed, unlike how Greece is perceived by creditors.

If a person, Ehrlich analogized, owes the bank a few thousand dollars, the bank can put that person into default and penalize him or her harshly.

“If you owe the bank a trillion dollars, they really can’t put you in default because that would put them in default also… so they tend to kind of work with you,” Ehrlich concluded.

On Wednesday night, the Greek parliament passed a new set of austerity measures in exchange for funding from its international creditors.

Ron Paul at CPAC in 2011. - Sputnik International
Ron Paul on Greece Crisis: Is America Next?
Eurozone leaders reached an agreement earlier in the week to support the Greek economy with an additional $95.7-billion loan in exchange for economic reforms in the debt-ridden country.

Since its founding in 1830, Greece has declared bankruptcy six times.

To participate in the discussion
log in or register
Заголовок открываемого материала