NEW YORK (TheStreet) -- In terms of the Greek situation, it is all politics now; economics must take a back seat. That's what happens when a debt situation gets out of control, something we have seen all too often in recent years.
The back seat, however, offers an opportunity to look back at lessons learned from this crisis -- and others like it. Here are four:
1. Debt is a contract that must be honored. Countries just cannot just keep running budget deficits and then expect them to be forgiven sometime in the future.
This is especially true in a situation like Greece where some national sovereignty is given up to join a currency union so that there is no national currency or independent monetary policy.
But, this national sovereignty is even given up, as in Venezuela, Argentina, and Brazil, where the lack of any kind of fiscal discipline is ignored with the justification that the population of the country needs to be supplied with the things it wants. Monetizing the debt and creating inflation does not work either.
Debt must be repaid or the country must suffer the consequences. And, one party, Syriza, led by Prime Minister Alexis Tsipras, can only ignore previous Greek government commitments by accepting the consequences of such a denial.
It is not sufficient to tweet about, as Tsipras just did, "The dignity of the Greek people in the face of blackmail and injustice...." The Greek government made a commitment.
2. Keynesian policies can hurt. The fundamentalist Keynesians fight against government austerity programs because they believe the government should do everything it can to put people back to work in the jobs that they formerly held.
Such a policy achieves two things: it convinces workers that they don't have to improve themselves and their skills in order to work in a more modern industrial worlds; and it keeps labor unions in power because of the stagnant skills of the labor force.
Years of such policies connected with government promises to put people back into their old jobs only produces a stagnant economy and a growing number of workers that are increasingly less employable.
3. People with wealth or people who are economically sophisticated adapt to the government policies and learn how to benefit from them. Keynesian economics assumes that investors or people with money don't change how they invest or use their money.
One thing we have learned over the past fifty years in the United States and Europe is that continuous credit inflation stimulated by government budget deficits cause sophisticated investors to play government efforts, something the less sophisticated cannot do. Just ask George Soros.
4. Microeconomics does work. Behavioral economics has emphasized how people aren't always rational, as is assumed in classical economics. Furthermore, other economists have emphasized market failures and other breakdowns in how markets work. Yet, economists also talk more and more about the unintended consequences of economic policies. This area of economics seems to be one of growing interests, although not by the fundamentalist Keynesians.
More study is going to go into the causes of unintended consequences because these unintended consequences not only work against the good intentions of the people that implemented the policies in the first place, they also provide wonderful opportunities for others to make money, the others not being the ones that the people that implemented the policies wanted to help.
One of these days, the reality that there is no such thing as a free lunch is going to come back into fashion. This also means that the United States cannot supply tremendous amounts of liquidity to the world, as it has over the past fifty years or so, liquidity that is so plentiful that investors freely invest in the debt of undisciplined countries, like Greece, and spur on those politicians that only care about their ideology.