Daily Archives: July 30, 2012

I have argued in previous posts that the policy of letting the government deficits offset the natural post-crisis austerity of the private sector makes excellent sense, provided the country in question has a solvent government. I have argued, too, in the most recent post, that the objections to this policy are not decisive. What matters is making the best of bad alternatives.

Yet let us also look at alternative ways of accelerating deleveraging. Broadly there are two: capital transactions and default. The latter, in turn, comes in two varieties: plain vanilla default and inflationary default. Read more