In recent months the Main Street Media have been spewing forth on the risk of sovereign default by many industrialised economies. Few are immune from the list of suspects, including the United States. If you believe the propaganda, you would think that default by government is a rare and unusual thing.
However, we have been here before- many times in fact. In a recent book; “This Time is Different, 800 years of Financial Folly”, Kenneth Rogoff and Carmen Reinhart have created a seminal resource of financial crisis. They lay out clearly with hard evidence just how common defaults are. Some countries are serial offenders, and they are not restricted to the third world and developing nations.
At present Greece is constantly in the headlines, yet from 1800 though to well after the Second World War Greece was in almost constant default. Why anybody would think this would change after the joining the Euro is anybodies guess. France, Portugal, Italy and Spain have all had numerous defaults.
Money or Credit?
To understand why and how a default occurs it is important to understand what money is and how governments get it.
Log in or apply here:
