NEW YORK (TheStreet) -- When it comes to Greece, "Stupid lenders lose money," as Martin Wolf wrote in the Financial Times today. 

Nobody forced anyone to lend Greece any money, yet today we stand with Greece's mountain of debt threatening to wreak havoc in the Eurozone and across the world. How did this happen? 

Greece was lent money in the first place because, "Initially, private lenders were happy to lend to the Greek government on much the same terms as to the German government," Wolf writes. This was back in the days where all sovereign debt issued within the eurozone was assumed to be risk free. That is, as sovereign debt that was a part of the common currency union, all Eurozone debt was treated in the market as perfect substitutes because of the backing of the European Central Bank and the European Union.

When the fallacy of this assumption was revealed, according to Wolf, "in 2010, it became clear the money would not be repaid. Rather than agree to the write-off that was needed, governments (and the International Monetary Fund) decided to bail out the private creditors by refinancing Greece."

At that point, the International Monetary Fund, the European Central Bank and European governments helped Greece avoid default on its loans by loaning it yet more money, effectively kicking the can down the road. 

As Karl Otto Pohl, a former president of the Bundesbank, "candidly noted" (in another piece on Greece) this action "was merely a cover for bailing out German and French banks, which had been among the largest enablers of Greek profligacy."

So, what should be done? 

According to Wolf, "the least bad outcome might be to accept the reality of default and leave Greece to decide what to do. That would be a bad outcome. But who is now confident of a better one?"

Ashoka Mody, an economist at Princeton argues in BloombergView that the IMF, "Instead of demanding repayment and further austerity...should recognize its responsibility for the country's predicament and forgive much of its debt."

Over the past fifty years or so lenders have been pushed to make loans. At one time bankers were looked upon as people who did not lend money to anyone but those that didn't need to borrow money. By the turn of the century, these same bankers were giving out mortgages to people with no down payments, no credit history, and no evidence of income.

National government debt was often treated as "risk-free" because the governments could always print money to pay off their debts.

But, looking back as far as the 1980s, we see numerous currency crises and governmental crises, like that of Greece, but also of Ireland, Spain, Portugal, and Italy, created by a lack of financial discipline in governmental areas and sectors the governments excessively supported, like real estate.

With so much credit being pumped into economies, who could not lend. "When the music is playing, one must keep on dancing."

And, investors took on more and more risk; banks and others took on more and more financial leverage; and more and more financial innovation was created.

Still, debt continues to pile up. For example, Asian debt is another concern.

Debt must be repaid, regardless of what the Keynesian economists say. That is, until it is not repaid.

If debt will not be repaid, does that mean we are nearing the end of the post-World War II era of easy borrowing, where debt became the way to greater wealth because borrowers were protected on the downside by credit inflation?

What Wolf said has turned out to be true time and again: "Stupid lenders lose money."

This article is commentary by an independent contributor. At the time of publication, the author held no positions in the stocks mentioned.