Greece's and other southern European countries' debt has been considered a problem since the 2008 crash, and austerity measures have been forced to the people.

However the United States also have a colossal debt, yet I have never heard of it being a problem or that the United States requires austerity measures.

I have no idea how accurate they are, but the US debt clock displays a debt with 14 significant numbers in US$, while the Greece debt clock "only" displays a debt with 12 significant numbers (also in US$). Other sources state $32,000 per capita for Greece, $56,000 per capita for USA.

I know that the population of Greece is much less than in the U.S., however I do not think it matters to people "lending" money to the governments - In both cases it seems extremely unlikely that this money will ever be refunded. Also Greece receives more tourists each year than it's own resident population (15 million tourists for 11 million residents) so it's hard to compare.

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    A minor nitpick, but there are plenty of people in the United States who do consider it a problem - however, the answers below should give you a clear indication of why other countries in the world don't consider it a problem that requires intervention.
    – Zibbobz
    Commented Jun 19, 2017 at 13:14
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    In both cases it seems extremely unlikely that this money will ever be refunded Do you mean to say that you think the US and Greece are extremely likely to default on their debt? That's how I read this. It's not extremely likely, or somewhat likely, or any kind of "likely". If there was the remotest chance, interest rates would be much much higher. Commented Jun 19, 2017 at 15:37
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    "In both cases it seems extremely unlikely that this money will ever be refunded" - note that it doesn't matter if the debt will ever be paid of for lenders - only that all payments are made on time. It is similar as with credit card - they don't care if I'm having balance on it as long as I'm paying minimal payment and my debt-to-income ratio does not go too high. It might not be prudent to run balance (though goverment debt is more like mortage or college loan as in it may be benefitial to take as investment). Commented Jun 19, 2017 at 16:51
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    "In both cases it seems extremely unlikely that this money will ever be refunded": This is very clearly false; people who have US bonds are getting their money back, consistently and on-time. You could buy a bond yourself if you'd like; then you'd own part of the US debt, and in all likelihood, get paid back the promised amount at the promised time.
    – Nat
    Commented Jun 19, 2017 at 19:20
  • Comments are not for extended discussion; this conversation has been moved to chat. Commented Jun 24, 2017 at 19:42

9 Answers 9


I know that the population of Greece is much less than in the U.S., however I do not think it matters to people "lending" money to the governments

This is where you are mistaken. The lender is concerned with the ability of the borrower to pay back the debt. If I have an annual income of $100,000, then all else being equal I can borrow much more than if my income is $10,000.

The relevant measure here is debt-to-GDP ratio; that is, the size of debt in relation to the national economy. The "national economy" encompasses all industry and other economic activity, including tourism. The values are 181.6% for Greece and 73.8% for the USA. Basically, the debt of Greece is about 2.5 times larger in relation to its economy.

Investors also take into account the borrowing country's political stability, tax collection, spending commitments, and so on. (This is analagous to a mortgage lender considering employment history, outgoing expenses, and the like.) On all these counts, Greece is in a worse position than the USA, so it is even worse off than the headline figure would indicate.

Finally, the USA's national debt is denominated in dollars. If needed, the Federal Reserve can issue as many new dollars as it likes, so the USA cannot fail to pay its debt (unless its government chooses to default). Greece does not have this advantage, because its debt is denominated in euros.

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    Aside from pure numbers, there is much more confidence in the US ability to repay its debts - the country is the wealthiest in the world, and it has never defaulted - than Greece's. Maybe they are over-confident with this, but that's the current situation.
    – Rekesoft
    Commented Jun 19, 2017 at 11:05
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    @Bregalad: Fair point about ability to pay, I've expanded my answer. As for "paying back the debt" -- unlike private citizens, governments are immortal and never have to pay off their debt in full. All that matters is being able to meet the payment schedule, which the USA can do much more easily than Greece. Commented Jun 19, 2017 at 11:17
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    @Bregalad It is the ability of the borrower to pay back the debt, but it's not the ability to fully pay back the debt. -- Paying back the debt you owe to Paul by taking out a new loan from Peter is perfectly acceptable (as far as Paul cares). All you need to do is find enough Peters to take the deal, and come up with enough cash to keep up with the interest. The US has no problems with that, whereas Greece does. Heck, US debt is viewed as safe enough that a large number of Pauls say "don't bother with cash - just pay me my interest with another loan."
    – R.M.
    Commented Jun 19, 2017 at 12:52
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    Why is that last paragraph seen as a good thing? If the reserve issued new dollars to pay its debt, wouldn't the dollars have much less value? Commented Jun 19, 2017 at 14:59
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    @KABoissonneault I don't think it's being called a good thing; just an option. The US could run the printing press and pay off its national debt in cash; at the cost of a surge of massive inflation that'd cause all sorts of followon problems. Greece doesn't have the ability since joining the Euro because it no longer owns its own currency any more. (Other Eurozone members, along with countries that have pegged their currency to a foreign one have the same problem of not being able to control their money supply any longer.) Commented Jun 19, 2017 at 15:18

It's going to be difficult to really choose a "best answer" here since to some extent the factors involved, and especially which ones are "most important" is going to be a matter of opinion. And this is because economics is not a settled science in the way that physics or chemistry are, such that there are "correct answers."

That said, while it has already been noted that many people DO consider the US debt to be a big problem, and relative population and relative GDP do certainly matter. The one I'd emphasize above all has mostly just been mentioned as an "also" reason.

And that is ... the denomination of the debt. The US can print dollars. Greece cannot print euro. You don't have to think this through very hard to see that this means the US can ALWAYS pay its debt in dollars, while Greece cannot say the same in euro.

Now, if the US prints dollars to pay its debt, that can cause inflation, but the cost of inflation is borne by everyone while the cost of default is borne by only the bondholder. This is not only a difference, but a vast difference--one which is easily large enough to change the result.

In the case of Greece, and countries like Greece, default on sovereign debt causes the banking system to fail, which is an existential problem for a modern economy. In the case of the US, and countries like the US, high inflation erodes wealth and creates various pernicious incentives, but it (almost) never causes the banking system to fail, although in very extreme examples it has been seen to do so occasionally, for example you could look at the Weimar Republic between WWI and WWII.

But if you did look at Weimar you would see what an extreme case it was, Germany having lost WWI and been saddled with huge reparations by the Treaty of Versailles, and the US is nowhere near that situation.

Bottom line, in Greece you get a collapsed banking system. In the US you get inflation. Many regard inflation as a problem, and rightly I think, but it's not as bad a problem as a collapsed banking system.

In my view, that is the big "why." It is the one which, so to speak, is a difference in kind rather than a difference in scale.

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    Printing dollars to pay debt really does work. It works constantly, is happening right now, and has been happening since whenever the US last had a surplus in real terms (Eisenhower days, except maybe one Clinton year). It's true people lending do expect to get back money plus some profit--or they should, if they are rational, which isn't true as often as you'd think--however all that does is lead to inflation, and possibly more inflation after that, which I already acknowledged. But it definitely does work, almost unlimited times, and is in constant use by governments all over the world.
    – RCM
    Commented Jun 19, 2017 at 16:49
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    Here are two cool charts. They show the number of dollars in the economy. Not the value of the economy, just the number of dollars. One is the actual number and one is the number after the banks get hold of it. Bottom line, the US controls it's own fate in these charts and Greece has to rely on what the EU wants to do. Monetary base: fred.stlouisfed.org/series/BASE; M2 (base plus some other stuff): fred.stlouisfed.org/series/M2
    – RCM
    Commented Jun 19, 2017 at 16:58
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    @jamesqf, printing dollars to pay debt works just fine, it just means that the next time you want to borrow, the lenders will demand more interest to cover the inflation from the dollars that have been printed. It's only when you get in the long-term habit of only paying your debt with newly-printed money that you get problems.
    – Mark
    Commented Jun 19, 2017 at 23:45
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    @jamesqf: There is no "if" here. What I have described is happening all the time. To answer your specific question, it is not necessary to print enough dollars to keep the debt from increasing, but only to keep up with interest payments. Technically this is an increase to the monetary base, rather than the money supply, though the two are closely linked. It absolutely IS done to finance the debt (through the mechanism of buying government bonds with new cash). You don't have to agree this is the main difference between the US and Greece, but denying it happens is counter-factual.
    – RCM
    Commented Jun 20, 2017 at 7:27
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    Might be worth mentioning here that the US (almost uniquely) has a large debt that doesn't appear on the balance sheet at all, because there are so many countries that use US dollar bills for everyday internal commerce in preference to their own currency. In principle these countries have lent the US money, at 0% interest, to buy these banknotes, and could sell them back any time they chose. Commented Jun 21, 2017 at 8:36

Greece has a higher debt-to-GDP ratio than the United States. Greece's debt-to-GDP ratio is 182% which is the highest in Europe and 2nd highest in the world. In comparison, the US's higher debt-to-GDP ratio is 126%, according to OECD data.

General government debt-to-GDP ratio is the amount of a country's total gross government debt as a percentage of its GDP. It is an indicator of an economy's health and a key factor for the sustainability of government finance.

However, this is not the problem, since Japan theoretically has a even higher ratio at 234%. (As to why Japan's debt isn't a problem, this answer on Quora explains it). The problem with Greece's debt lies in it's unemployment rate. Greece has an unemployment rate of around 25 percent, a number higher than the United States during the Great Depression.

Also, other countries are not willing to lend to Greece money at reasonable rates, so Greece is unable to keep paying to service its current debts while carrying out basic government functions. Furthermore, Greece is quite bad at collecting taxes, as seen from OECD data, it has a 89.5% of outstanding undisputed tax debt. Its GDP growth was also negative from 2008 to 2013.

So, all of these led to a crisis of confidence, making its debt a big problem.

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    "Other countries are not willing to lend to Greece" - note that most state debt is owned by private entities (pension funds, banks, even private individuals). Greece is already exceptional that its debt is so high that private entities refuse to lend any more money to Greece, and its debt is owned by other EU member states. The problem is that Greece needs new loans to repay existing loans, and the other states expect Greece to have its affairs in order so the new loans are again provided by private entities. This is probably not yet the case.
    – MSalters
    Commented Jun 19, 2017 at 13:14
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    @PatrickTrentin different numbers depending on what you count as debt. US national debt is partially owed to the US (gross oversimplification), and that portion is often omitted. (I cannot speak for what type of debt the different people responded with)
    – Jeutnarg
    Commented Jun 19, 2017 at 19:01
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    Part of the crisis is also that Greece has well-known problems collecting taxes, which means that they can't even effectively harness the GDP they do have to generate revenue.
    – T.E.D.
    Commented Jun 19, 2017 at 20:59
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    @MSalters The problem is deeper than that: Other EU countries now expect Greece to enact self-destructive reforms, which it does, only to discover that they don't work (especially in a context where currency adjustments are impossible). Greece isn't free to “have its affairs in order” any time soon.
    – Relaxed
    Commented Jun 20, 2017 at 7:17
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    @Relaxed: It's true that the effects of reforms so far are disappointing. In particular, there's no significant influx of foreign investment capital. This keeps the unemployment high, and the tax base small. There needs to be a significantlowering on wages and social security payments. And as you correctly note, that lowering no longer can be achieved by devaluing the Drachme.
    – MSalters
    Commented Jun 20, 2017 at 8:13

There are a number of factors which indicate how much of a problem debt is, these apply to both countries and individuals.

First is how large the debt is as a proportion of GDP. This provides a crude indicator of how capable the country is of paying it back. Having said that GDP isn't exactly the same as the cash a government has available as this is liked to the tax system. A country which has low overall taxation or is ineffective at collecting taxes is much less bale to pay off debts.

Debt vs deficit. Debt is the total amount owed while deficit is the difference between income and outgoings. Clearly if a government is spending more than it brings in its debt is only going to increase. This isn't a disaster in itself but needs to be controlled in the long term as interest payments will start to seriously eat into its overall budget.

Perceived risk. Countries with growing economies and substantial assets can generally manage high levels of debt in the medium term as lenders are confident that they won't actually default, however countries perceived as being at high risk of default end up paying higher interest rates or even being unable to borrow at all.

Greece also has the particular problem that it is committed to the Euro. This means that it can't decide on its own to either print more money or change interest rates as these decisions are made by the European Central Bank. If Greece has its own currency it could just let inflation take a big bite out of the overall debt by printing more money and lending it to its banks. This isn't ideal and leads to new problems of its own but is one of the options countries with their own central banks have for averting immediate disaster. On the other side of the coin (pardon the pun) the ECB definitely doesn't want the Greek economy to collapse completely or Greece to leave the Euro and so is prepared to prop up the Greek economy, albeit with conditions which are politically unpalatable for the Greek government.

Greece also has a big problem in that its economy is in a very bad way with very high unemployment and little in the way of wealth creating industries.

'Wealth creating industries' being those which put cash or tangible benefits into the economy as a whole either through taxation, wages or by creating technology, infrastructure or services which improves productivity. For example an industry which employs a lot of well payed skilled people is good for an economy even if it only makes a fairly modest profit and even if it doesn't pay much direct tax.

  • What is a “wealth creating industry”? Is that different from any industry?
    – Relaxed
    Commented Jun 20, 2017 at 17:59
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    Well, it's different from a loss-making industry... Commented Jun 21, 2017 at 8:38
  • @reirab: Missed it somehow, sorry.
    – einpoklum
    Commented Jun 24, 2017 at 14:58
  • @MichaelKay Well, in that respect, not so much. A company losing money will sooner or later face problems but in the meantime, the industry contributes to production and employment all the same. The truth is that this isn't really a useful way to think about the country's economic problems: The country isn't that poor and has industries all right, including several export industries like shipping and tourism.
    – Relaxed
    Commented Jun 28, 2017 at 21:05

As others have said, the Greek debt is more problematic for Greece than the United States debt is for the US. Greece's debt is larger compared either to Greece's GDP (Gross Domestic Production) or to national wealth. However, you said:

However the United States also have a colossal debt, yet I have never heard of it being a problem or that the United States requires austerity measures.

If you haven't heard about US austerity measures, then you haven't been listening.

  1. In 2011, the US passed sequestration. The basic idea was that spending growth would be limited in all discretionary categories.

  2. In 2012, after the election, then President Barack Obama made a deal that repealed 25% of the Bush tax cuts and allowed the emergency tax cuts from the 2010 deal to expire.

Now, it is reasonable to argue that the United States has had insufficient austerity to balance the budget (since the budget remains unbalanced). But it has engaged in some austerity programs. And it has been viewing its debt as too high. There is some concern that Obama didn't prioritize this enough and that Donald Trump won't.

It is also worth noting that 40% of the US debt is owed by the US government to the US government for making future entitlement payments. That is a problem, but it is one that has little impact immediately as that debt is still increasing. Those programs still produce more revenue than spending. Without that debt, the US is well behind not only Greece, Italy, and Portugal, but such countries as Belgium, Spain, France, and the United Kingdom (UK). Even with that debt, the US is behind Greece, Italy, Portugal, and Ireland.

  • Good answer, except that the part about the entitlement programs still producing more revenue than spending isn't true of all of them (and, if you ignore interest income on the existing trust funds, it isn't true for any of them.) SS Disability would have completely exhausted its trust fund last year, had it not been bailed out from the SS retirement fund. SS retirement and medicare are also both spending more than their non-interest revenue, though SS retirement's interest income is projected to make up the difference for 2 more years, after which all of them will be redeeming their funds.
    – reirab
    Commented Jun 24, 2017 at 8:54
  • SS retirement's pre-interest revenue has been less than its spending every years since 2010 and Medicare Hospital Insurance has had pre-interest income less than its expenditures since 2008. Both of those programs, along with SS Disability, are projected to continue having expenses greater than revenue for the remainder of their Board of Trustees' 75-year projection periods.
    – reirab
    Commented Jun 24, 2017 at 8:57

It is not the GDP and not even production, but the trade consumption and demands that determine the economic strengths, thus affect the debt repayable capabilities. That's why New York replace London as the world trading center in after world war 2.

So in the scale of economy on trade, it is ridiculous to compare Greece with the USA. It is like comparing an infant try to trade their piggy bank with an adult with well establish trade networks.

Thus, unless Greece able to produce products demands by the rest of the world (imagine something like iPhone, not commodities like olive, industrial like tourism, etc) and has a controlling stake in it, otherwise, Greece cannot balloon its debts in the similar level as USA. This rules also apply to resource-rich country. That's why in 2008 world economic crisis, UAE can't simply print money to absorb Dubai debts.

The French Missippi Company historical event show bubble will eventually burst even with the support of huge institutional body such as government. Unlike French in the 18 century, today USA economies are highly diversified, government debts can be spread by the various stakeholder in USA economy (that's why China and Japan are US biggest bond holders).

Do take note this kind of trusts on trade economy is not limitless, otherwise, USA Fed will face the same fate as French Missippi Company bubble. That's why you see rate hikes to reverse the trends, even though Wallstreet speculator lobbying to continue QE.


Debt is a game where you lose if you're the last one to lend before a default.

This is why astronomically high debts are not sustainable. Sure, banks could theoretically lend you personally a billion tomorrow, and you could spend it and 'repay' it by borrowing more and more. The banks would be happy, as long as, should they need their money, they will actually get it -because you would borrow it from someone else. But they would be on the lookout for one another: the moment no other bank is willing to lend to you, they run the risk of needing some of that money back, and having to be the one to admit it's not there anymore.

That's why debt/GDP is important: if it's reasonable, then you wouldn't become instantly insolvent the moment a bank needs any of its money back -you could tax your citizens to get it. So even if it's impossible to get back all of the sum, your ability to backstop at least to some degree a credit crisis makes it so that banks don't need to worry nearly as much, and are not tempted to flee. The limited amount of trust generated by your limited ability to repay is compounded by the fact that the banks trust that the other banks trust that you are unlikely to miss a payment anytime soon; and so that in addition to your own funds, you will also keep to be able to repay by borrowing.

Which allows to keep the scheme going almost forever, with everyone happy.


Because of what debt is. Sovereign debt is money owed to bondholders who own that nation's bonds. The largest owners of such investment vehicles are pensions funds and individuals holding small bond portfolios in their pension funds. In order to continue borrowing money a country has to be able to credibly state that it will repay the money it borrows. Otherwise, lenders will not take the chance of lending their retirement savings to that country (by purchasing bonds) anymore. If a country ever skips or if it is late with a bond payment, then is considered to be in default. The promise to pay becomes broken at that point.

To the bondholders (the creditors), it doesn't matter if the country prints money, collects taxes, or does whatever else. If they don't get their payment, then this country's ability to pay becomes automatically questionable.

As it happens, US can print its money, so its ability to make the next bond payment is never in question. Greece cannot print Euros. And while there are many foreigners who do business with Greece either as businessmen, or as individuals buying Greek goods or services, they are not the ones buying Greek bonds. Well, some of them may be. But, in general, doing business with Greece does not mean having to buy Greek bonds, so they don't. That's done by other organizations and individuals. And since Greece can't print Euros, its choices are to reduce domestic spending and spend the euros to pay bondholders, or to default and lose the ability to borrow money in the future (or borrow money at a very steep interest rate which it can't pay anyway so it probably won't convince many lenders to lend it money).

The key to understanding why paying off the entire national debt is not what concerns people is that bonds have maturity from a few months to 15 years (sometimes a 30-year-bond is issued, but US hasn't done that in a while). And this time period is the time after which the principle on the bonds has to be paid off. Anyone buying a bond doesn't care that all bonds will not be paid off without borrowing more money (which is what would have to happen for the debt to be paid off). They only care if the bond they bought gets paid. And if it's paid off with money borrowed from someone else who is willing to lend, it makes no difference.


The correlation of debt level (in terms of debt/GDP ratio) and probability of default is, perhaps surprisingly, not very strong. Japan is often cited as a country with high debt level which still enjoys the creditors' confidence, which is usually reflected in the interest rate at which a country can borrow money.

Even countries like the U.S., Germany or France have fairly high debt after the 2008 crisis without much loss in creditor confidence, if any.

Apparently a much stronger indicator is the quality of government. Countries with low levels of corruption and well-operating governments are defaulting rarely, while bad governance is correlated with high probabilities of default. Googling "debt default good governance correlation" returns a number of papers exploring this connection.

Greece is, unfortunately, among the worst-governed countries in Europe. Corruption is wide-spread, political parties traditionally serve their clientele at the expense of others unabashedly, and parts of the administration, for example the real estate register, are almost non-operative.

This results in the realization that as soon as external conditions turn unfavorable — i.e. when the free lunch of automatic growth and undiscovered deception is over — the likelyhood of almost any level of debt to be repaid is low.

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