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okaycuckoo

Financial Repression - Secret To Britain's Empire

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Here's one for historians - Debt Sustainability in Historical Perspective: the role of fiscal repression - 25pp PDF

Britain wiped out domestic commercial lenders in the 18thC through usury laws and enticed subjects' surplus funds into its own coffers. Interest rates plummeted, and the Frogs and Indians got their arses kicked.

It's the origin of the 3% consol, famous through Victorian husband-hunting novels.

The authors call it fiscal repression - not sure if there's a distinction. They also contrast bankruptcy of the Spanish empire - they were probably more prudent than the British, but didn't play the repression trick. Hello, ECB.

Be good to get some views on it. Interesting read anyway.

Edited by okaycuckoo

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I read the whole thing found it fascinating and have loads of pertinent opinions but I thought this thread was too dull a place to post them.

Only kidding - only just seen the link, will print and peruse tomorrow.

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Keeping interest rates artificially low to stay on top of unsustainable government debt seems to be one of our traditions :)

But it worked - therefore sustainable.

The difference today - commercial lenders have not been repressed and their unsustainable debt has been pumped into landowners.

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The narrative seems plausible enough but the mathematics seems bizarrely simplistic. I laughed when I saw the "fitted lines" in table 1.

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