Debt drug

A derogatory term used in financial journalism in connection with the Greek crisis and the considerable imbalances in the national budgets of southern European EMU member states. The term is intended to indicate that, just as a person quickly becomes addicted to narcotics and then stops thinking rationally, so too do states become dependent on public debt, which acts like an addictive substance. This is especially true if other states – or in the EMU also the central bank – keep supplying the indebted members with money. Within a short time, citizens in countries with excessive deficits no longer see that restrictions are necessary to bring revenues and expenditures back into balance. Governments do not want to incur the displeasure of the people and prefer to negotiate new loans with lenders, although rallies of enraged citizens come in handy because they support pressure (pressure: an insistent, forceful appeal to act) against the lenders. In this way, the habit of spending more than one takes in becomes entrenched. Like a drug, the state is thus at the mercy of debt. – Lenders believe the better way is to continually transfer purchasing power to deficit states in the pale hope (vague hope) of one day seeing the money again. – See bazooka, bail-out, balance sheet adjustment, domestic flexibility, blame game, deficit financing ban, expropriation, cold, European Monetary Union, fundamental error, European Stabilization Mechanism, Europayer, ECB fall from grace, financial solidarity, cash cow, money multiplication, monetary union-internal, creditor primacy, hegemon, mild, default, Italian method, moral suasion, low interest rate policy, zero interest rate, Plan C, policy clamp, policy default, repression, financial, bailout, bailout Europeans, bailout routine, risk takers, final, Rogoff study, shadow state, debt-debt recipe, debt union, solidarity, financial, Stability and Growth Pact, fundamental error, southern front, constitutional article one, debt-productivity chaining, debt incentive, contract fidelity, growth-debt fact, historical, path inflation, two-way option. – Cf. Monthly Report of the
Deutsche Bundesbank Monthly Report of October 2012, pp. 13 ff. (in-depth discussion of debt-related constraints in EMU; overviews; references), Deutsche Bundesbank Monthly Report of November 2012, pp. 22 ff. (government budget deficits in the euro area as a whole and in problem countries; overviews), Deutsche Bundesbank Monthly Report of January 2014, pp. 41 ff. (detailed, in-depth discussion of the situation in EMU).

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University Professor Dr. Gerhard Merk, Dipl.rer.pol., Dipl.rer.oec.
Professor Dr. Eckehard Krah, Dipl.rer.pol.
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