Roseman: Should we resort to financial repression max?

Over the course of history, whenever governments have over-borrowed and become enmeshed in a debt trap, they have typically resorted to a process of financial repression as a means of redressing the problem.

Academics, notably Professors Reinhart and Rogoff, have explored history to outline incidence, extent and rationale for why governments have been such enthusiastic fans of the process. Financial repression, in its simplest terms, is a transfer of wealth from those who have saved, to those who have (over-)borrowed. Typically, the biggest over-borrower is the government. The standard technique for this wealth transfer has been achieved by artificially keeping interest rates below the level of inflation. Obviously, the bigger the gap between these two variables, the more effective the we...