Berkeley Economic History Seminar: http://www.imf.org/external/np/seminars/eng/2011/res2/pdf/crbs.pdf
You can liquidate government debt in six ways:
- You can pay it off.
- You can "restructure" it.
- You can destroy the value of your currency.
- You can let inflation nibble it away.
- You can let growth nibble it away as a share of economic resources when investors are happy to hold it at sub-market interest rates.
- You can let growth nibble it away as a sure of economic resources when your regulatory system forces investors to hold government debt at sub-market interest rates.
"Financial repression" as an effective tax on asset holders. Colbert: "the art of taxation is that of extracting the most feathers with the least hissing…"
"In the United States, for the puppies in the back, we had Regulation Q which prohibited the payment of interest on checking accounts and limited the payment of interest on savings accounts. In the U.K., up until the 1960s it was easier to acquire nuclear weapons than to acquire currency with which to travel abroad…"
"You will like this, Brad. When we wrote our book we said that Australia had never undertaken a debt restructuring. Not so, said people in the Australian Treasury: 1932. Anytime some investor "voluntarily" trades a short-term high-yield instrument for a long-run low-yield instrument alarm bells should ring. This time this was a "voluntary" conversion rather than an "involuntary" restructuring because if you didn't do the conversion you faced a 40% tax…"