Gerald (Jerry) Zezas

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The Greek Financial Crisis Explained


Greece voted no to austerity, which could cause other member countries in the EU (European Union) to eject it from that group. If that were to happen, Greece’s currency would no longer be the Euro and it would go back to using its traditional currency, the Drachma.

There are a myriad of other opinions on this issue, but I think that the Greek people may have chosen the best path, since the austerity program which has been forced on them by the EU has only made things worse.

The benefit of having been ejected from the EU would be that Greece could devalue its Drachma to whatever level it wanted (it does not have the authority to devalue the Euro, since that would affect all the other countries’ currency value as well), which would cause products made in Greece to become cheaper relative to other currencies, and thereby more valuable to outside investors, causing them to pour more money into the Greek economy, thereby helping the Greeks to pull out of their crisis.

This will cause the Greeks some short-term pain and increase the cost of imported goods within Greece, but is probably a good solution to their financial problems. No folks, running a government is not even remotely like balancing your checkbook, and devaluing a currency, although it sounds quite negative, can be a good thing when necessary.

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