Comment Re:Why? (Score 1) 253
If you have your own currency you can print money. That gives you liquidity, at the cost of massive currency devaluation.
Oh dear. First, Greece is on the Euro - they can't print more money.
Second, money is just a representation of value/wealth. It is not value/wealth in and of itself. The true value is productivity. Anything you do to alter the money supply changes nothing if productivity is not altered. All that happens is you just add or subtract a zero to every number used in the accounting books. If your paycheck increases by 10x, but prices also increase by 10x, then nothing has changed. The economy gains no liquidity from printing money.
The one thing printing more currency does is shift wealth away from people who have been saving up (i.e. your savings account at the bank) to the entity printing the money. This is why investors flee to gold in bad economic times - the government cannot print more gold, so its value cannot decline due to this type of wrong-headed fiscal policy. (Note: It could actually be the proper course of action if huge amounts of the country's wealth is being held by a small group of extremely wealthy individuals. But I don't believe that's the case in Greece.)
Same thing happens with debts (which are just a form of deferred savings). Debt repayments don't scale with currency fluctuations, so if you print enough money that your need 10x as much currency to do the same thing as before, then suddenly your debt is 1/10th what it was before in terms of real productivity.
But that's exactly the same thing as defaulting on your debt. Except instead of defaulting on 100% of it, you've defaulted on 90% of it. And that loss of economic credibility (i.e. credit) will make it that much harder for you to convince someone to lend you money in the future, worsening your liquidity crisis.