How to get rid of our debt
How do you get rid of an out-of-control sovereign debt? We try to answer this in our briefing: What to do with the debt. But in the absence of a massive growth spurt that makes a country so rich as to render its debt irrelevant, there is really only one way – default.
A country can default for real by simply refusing to pay any more interest or capital back on its bonds. It can default by creating inflation and repaying those it owes in debased money. Or it can default on its successive governments’ political promises to voters by withdrawing any cradle-to-grave benefit promises its politicians might have come up with in the welfare arms races that pass for modern elections.
But whichever way you look at it, cutting deficits and then debts in a low-growth environment such as today’s means reneging on a promise to someone somewhere.
• Read the full editor’s letter here: How to get rid of our debt.