Greece cannot inflate the way the European Central Bank and the US FED do while they are part of the EU monetary system (Euro). Once Greece makes the break their sovereign debt can be paid in their new sovereign currency -- Drachma, which the Greek gov/Central Bank will control. Greece can value the Drachma as they choose and then pay their debt in the highly devalued currency.
$.02
I can't blame anyone that can ditching now before the currency shift.
From what I have read about the whole mess it appears like people holding Greek debt domestically are going to be the ones that get screwed the worst. They will get paid off in worthless new currency.
Its unclear just what will happen to Greek debt denominated in Euros held outside Greece. There is considerable question about just how Greece could force debtors outside the country to accept the new currency, as by EU law they can't just re-denominate external debt like they can internal debt. But it is also not clear if they can legally even pull out of the monetary union. It seems like the rest of the EU is prepared to let them leave the monetary side of the union without any fuss about it though. Probably glad to get rid of them.
It has always amazed me throughout history how lenders are dumb enough to loan money to sovereign entities without really giving a thought to how it will be paid back. It is just always assumed that sovereign entities will pay it back, no matter what, yet virtually every country has defaulted on its debt. In fact, that is the norm for most countries throughout history.
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Warning - I am not an expert on anything having to do with this forum, but that won't stop me from saying what I think.
Bob
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