If you’re concerned with public debt levels around the world, this is a great read. Here’s Chancellor’s introduction to the paper:
This paper seeks to answer several questions: Why in the past have governments defaulted on their debts? When have deeply indebted countries kept faith with their creditors? Under what conditions do governments opt for inflation rather than default? And, in the light of our historical findings, is Greece really the crest of a wave of sovereign debt crises about to crash down upon the developed world?
As you may have gathered, the debt crisis in countries that control their monetary policy and issue debt in domestic currency is really an inflation issue. The US will never technically default – they will print money and devalue the currency first.
But does he think the US is at that point? Read on…
