Saturday, August 1, 2015

Death by Debt: My Response to the German Finance Ministry, by Jeffrey Sachs

Death by Debt:  My Response to the German Finance Ministry, 

by Jeffrey Sachs

"Dr. Ludger Schuknecht, senior economist at the Germany Finance Ministry, 
explains his ministry’s viewpoint regarding Greece. This viewpoint essentially 
holds that Eurozone countries should live within their means; adjust to their 
debt burdens; and take their reform medicine as needed. If they do so, they 
will be successful, as illustrated by Ireland, Spain, and Portugal. Greece has only 
itself to blame, and indeed was on track to recover as of late 2014 if it had 
not deviated from its course."  
"I have enormous respect for Dr. Schuknecht as an able and thoughtful economist. Yet I believe that he misses a historical reality. While his policy prescription is certainly correct most of the time – countries should repay their debts and take the reform actions necessary to do so – it is also sometimes wrong.  It is wrong when debt servicing, combined with other economic ills, can push society to the breaking point.  The wisdom is to recognize the times that it is wrong and to act creatively at those times."  (edit)..... (Jeffrey Sachs)

For more of this article please read: