Rogoff and Reinhart back with the fear mongering over excessive public debt. Again, they do not distinguish among different monetary regimes. Evans-Pritchard falls for it.
The weaker eurozone states are particularly vulnerable to default because they no longer have their own sovereign currencies, putting them in the same position as emerging countries that borrowed in dollars in the 1980s and 1990s. Even so, nations have defaulted through history even when they do borrow in their own currency.Right, on the gold standard or if they peg to another currency, there are political factors such as war involved, or the leadership is too incompetent to know what to do — or are poorly advised.
The clear implication of the IMF paper is that Germany and the creditor core would do better to bite the bullet on big write-offs immediately rather than buying time with creeping debt mutualisation.
Morons or Peterson flakes?
The Telegraph
IMF paper warns of 'savings tax' and mass write-offs as West's debt hits 200-year high
Ambrose Evans-Pritchard
Thus proving the old adage that you can lead a moron to knowledge but you cant make one think...
ReplyDeleteI couldn't see a link to the IMF paper anywhere.
ReplyDeleteThis seems to be the relevant paper:
ReplyDeletehttp://www.imf.org/external/pubs/ft/wp/2013/wp13266.pdf
I agree Rogoff and Reinhart are morons. However Evans-Pritchard’s article is more of a précis or description of R&R’s paper than an endorsement of it.
ReplyDeleteAlso, I’ve Googled “Evans-Pritchard, debt, deficit” and there are plenty of articles by him on Euro debt, there aren’t many on the subject of monetarily sovereign countries’ debts. His views on the latter seem a bit ambivalent: half way between MMT and R&R. (I.e. he doesn’t understand the subject).