&gt;Austerity in the last few decades would have avoided the crisis<p>No it wouldn&#x27;t. The 2008 crisis and the European Crisis were both caused by an unsustainable build up of <i>private</i> debt. The levels of public debt had nothing to do with it<p>Even in Europe where there was multiple sovereign debt crises, the debts all started out in the private sector and were later shifted on to the public balance sheet. Same story in Spain, Ireland, Slovakia, etc. (even Greece to a large extent).<p>&gt;once you have more debt than you can ever afford to repay<p>&quot;Afford to pay&quot; means something different to governments than it does to the rest of us. Governments that print their own currency cannot run out of it. The only decision they have to make regarding the deficit is &quot;is the current level of inflation too much?&quot;<p>Austerity in the UK and the US is thus kind of like saying &quot;well, we must stop spending money because what if we run out of little green bits of paper&quot;. It would be funny how stupid it is if it weren&#x27;t so devastating.<p>Similarly in the EU inflation is rock bottom and the ECB could kickstart every ailing economy easily. They just don&#x27;t want to.<p>&gt;Since you refer to Greece in your other comment - I am more concerned about the politics than about the economics, given they don&#x27;t default even though they have a clear democratic mandate.<p>Greece has unfortunately handed over control of their payments system to the ECB and wresting back control is not something that can be done in under 9 months.<p>Thus it doesn&#x27;t really matter what the Greek government says or what their electorate wants - if they don&#x27;t follow Troika orders they flip a switch and the economy seizes up completely. Instant 3rd world status. No jobs, no money, no food, no life saving drugs.<p>This is why successive Greek governments have done the opposite of what they were elected to do. They have a gun against their heads and Schauble is just itching to pull the trigger if they don&#x27;t fall in line.