It is amazing how this basic truth, that every capitalist knows, about debt is veiled from public consciousness when it suits creditors:
“From the beginning, Merkel and the EU have operated from the position that because Greece took on debt, Greece now needs to pay it back. That position assumed â bizarrely, in hindsight â that debt works only one way: If you lend someone money, that money is repaid.
But that is NOT how free markets work.
Debt is not a guarantee of future payments in full. Rather, it is a risk that creditors take, in hopes of maybe being paid tomorrow.
The key word there is “risk.”
If you’re willing to take the risk, you’ll get a premium â in the form of interest.
But the downside of that risk is that you lose your money. And Greece just called Germany’s bluff.”