http://www.theguardian.com/business...-imf-global-stability-report?CMP=share_btn_tw I have yet to go and read the IMF GSR, but the Guardian normally does a nice job on reporting these kinds of thing so I am going to belive this is a good concise interpretation of the report.
Our country had experienced being heavily indebted starting in 1981 to 1984, I guess. In that 3-year period, there were no imported goods since the government have no dollars to spare. There were no new cars so the price of used cars had doubled. I remember the exchange rate of dollar jumped from 15 pesos to as high as 22 pesos and the interest rate on bank deposits had reached a high of 20% per annum. It was a nightmare for the economists who said that artificial inflation would kill the economy. Only the IMF had the ability to bail us out... and they did.
It's possible. The problem is that debt has been super cheap for so long... it seems really easy to take debt when all you will pay is 2% per year or so. Maybe not for individuals but governments and big companies just LOVE taking debt when it's this cheap. And of course the problems arise 10 years later when they have to worry about paying back the debt and the interest rates for new ones are higher than what they had on the old one.
