Some Countries in the European Periphery (Greece Being the Leading Example) Continued the Keynesian Practices up until the Early 1990s

In the period after the World War II, governments were totally devoted to the Keynesian ideas of irresponsible fiscal and monetary expansion up to late 1970s when ‘‘stagflation’’ appeared. Some countries in the European periphery (Greece being the leading example) continued the Keynesian practices up until, roughly, the early 1990s. It is true that the problems of inflation in the mid 1980s necessitated the adoption of certain austerity measures, but pure fiat money creation as well as fiat money creation through excess borrowing, continued. Despite inflationary expectations, the private sector was expecting ‘‘cheap money’’ in the long run. By late 1990s, the credit expansion was booming, and the Greek Olympic Games put much more pressure on public finances as well as on the public debt—which began skyrocketing since the early 1980s, under a socialist administration.

--Efthymios G. Tsionas, The Euro and International Financial Stability, Financial and Monetary Policy Studies 37 (Cham, CH: Springer International Publishing, 2014), 86.