Sovereign debt mountain left to erode the economic crisis may be difficult for many of the unpleasant legacy. Compared to the rich world in debt to GDP was approximately 90% are now common. Debtor governments, the undesirable options menu. Difficult problems growing out of his way will reduce the use of economies. Seriously, a second option is desirable and can easily own the rest. The default value is seen as a last resort. Politicians are looking for an easy way. There is another model. In many countries after World War II to reduce debt quickly without messy or painful austerity standards. 1945-138% of GDP in the British debt was 216% after ten years, for example, is low. By 2016, five years, but only three per cent of GDP in the British debt is projected to drop despite a tough austerity program. Why was it easier in the period immediately after the war to reduce debt?

Has helped the rate of inflation. Between 1945 and 1980 had negative interest on government debt. Money deposited in banks Savers, governments can borrow at interest rates below the level of inflation. Government purchased savers with money borrowed from the original return. Savers is a real, inflation-adjusted deficit, to improve the government's balance sheet is consistent. Mystery why poor savers accept returns over a long period of time. Policy Key component in the mixture, by Carmen Reinhart *, according to a recent working paper for the Peterson Institute for International Economics and University of Maryland Sbrancia Bethlehem, "financial repression" was.

Exchange rate and capital controls of Bretton Woods financial system, savers, remained higher returns abroad. High reserve credit in the economy's savings as some asset classes have forced most banks to close. Ceilings on bank lending rates, the Lord of the savings below market price, were stuck for rent. To have such rules were not facilitate debt reduction, despite side effects, certainly not gone unnoticed. System was everywhere, except to reduce the pressure on governments. Suppression impressive returns. "Test year" means that the negative real interest rates fell 3% and 4% of GDP in debt by the United Kingdom and the United States. Italy and Australia, other countries have enjoyed more than 5% of annual salary. Effect more than a decade has been great. From 1945 to 1955, the authors estimate that 50 percent of America's debt burden down from 116% to 66% of GDP. Interest rates, tax revenues per year, equivalent to 6.3% of the GDP was negative. U.S. budget surplus by 2013 without new austerity program that would be enough to move.

A situation of instability that is at work again after the war produced the suppression system. By increasing the reserve requirements of banks in financial trouble. UK Financial Services Authority regulators and banks to increase their holdings of safe government bonds for cash reasons, are forced. 3 Basel on bank capital and other assets of the new rules, the privilege is government debt, pushing the stock of government bonds, the returns to the current event. Interest rates in the post-war conditions are intended for a return to the sample after Sbrancia Reinhart advanced economies. Between 1981 and 2007, real interest rates were almost always positive. Since then they have been negative in about half the time.

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