This isn't a new revelation. It's been said by others, but never by someone of such high profile.
There is a clear risk of a sovereign debt crisis in most advanced economies, European Central Bank Executive Board member Juergen Stark said Tuesday.
The crisis began as a financial crisis and evolved into an economic one, Stark observed. Now, there is a "clear risk that we will enter a third wave, a sovereign debt crisis in most advanced economies."
Though it is tempting for governments to suggest higher inflation in order to monetize debt, "calling on central banks to raise inflation rates permanently takes the focus away from the overriding problem, which is that, at present, unsustainable fiscal policies represent a threat to macroeconomic stability in nearly all advanced economies," Stark said.
"If, on top of the financial uncertainties and concerns about public debt, the general public were to lose trust in the purchasing power of money, the consequences could be grave," he warned.