The Grecian Ripple Effect
To be such a small country, Greece certainly has a large effect on the world economy. This is because many of the world superpowers such as the United States do a great deal of business in Greece. However, that is not the number one reason that everyone is paying attention to the Grecian currency crisis.
Because the currencies of the nations of the European Union are so closely aligned, a problem with anyone of those countries becomes a problem for all of them. Although Greece is hardly the economic power of Germany or even Spain, it is in the European Union and as such, creates a ripple effect that will rumble through the economies of all of the major countries of Europe. This will eventually bring bad economic karma to the entire continent of North America and all of its economic partners across the world.
The length of the Grecian currency crisis also has a great deal to do with its effect on the world economy. Although many world leaders have met numerous times, they had not been a will to come to a consensus on whether they should bail out Greece or allow it to implode. So far, the country has been stabilized by many quantitative easing mechanisms that have basically turned that economy into a zombie.
The problem with long-term quantitative easing is the inflation it causes. If it goes on long enough, even though Greece will not have a sudden implosion, its currency will be so out of place that it will be completely unable to participate in the international economy. This will cause additional effects within the currencies of the European Union and with the aggregated currency the euro.
Any problem with the euro means a problem with the dollar. Any problem with the dollar, which is volatile to begin with, means a great deal of turmoil within the United States economy. Any turmoil within the United States economy means economic ripples throughout all of North and South America, Africa and further destruction in Europe. There are very few economies around the world that are not dependent on the United States in some way.
Many believe that allowing Greece to fall will reorganize the economic structure of the world in a way that is more balanced away from Western powers. Many also believe that the reason that Greece is such a big deal is because these economic monopolies that have been created by the United States and others are in jeopardy if Greece continues its economics slide.
Jonah Engler is a Financial Expert based in New York City. A full time stock broker, franchise owner, coffee lover and investor; Engler helps startup businesses and franchise’s grow through smart financial planning.