Interesting claim by you know who

It has its own currency, so it’s not Greece, because if you have your own currency you can’t default.

(And Ritchie says in comments \”As an economist I know how limited the accountants view of the world is\” which is really rather amusing.)

So let us look at the modern bible of defaults: This Time is Different. (Yes, I did get my copy as a freebie from the publishers and yes, it is worth buying if this sort of thing is your bag.)

Modern defaults (ie, post gold standard, post Bretton Woods fixed exchange rates, only countries with their own currency).

Algeria 1991, Angloa 1985, Egypt, 1984, Kenya, 1994, 2000, Morocco, 1983m 1986, Nigeria, 1982, 1986, 1992,2001,2004, South Africa, 1985,1989,1993, Zambia, 1983, Zimbabwe 2000, Indonesia, 1998, 2000, 2002, Myanmar, 2002, Phillippines, 1983, Sri Lanka, 1980, 1982, Poland, 1981, Romania, 1981, 1986, Russia, 1991, 1998, Turkey, 1978,1982, Argentina, 1982, 1989, 2001, Bolivia, 1982, 1986, 1989, Brazil, 1983, Chile, 1983, Costa Rica, 1981, 1983, 1984, Dominican Republic, 1982, 2005, Ecuador, 1982, 1999, 2008 (that last doesn\’t count as they had dollarised, maybe the second doesn\’t either), Guatemala, 1986, 1989, Honduras, 1981, Mexico, 1982, Nicaragua, 1979, Peru, 1976, 1978, 1980, 1984, Uruguay, 1983, 1987, 1990, 2003, Venezuela, 1983,1990,1995,2004.

And that is just external default: there\’s a whole other chapter on episodes of default on domestic debt to go as well.

Sure, some of these are wars, repudiations, regime changes and so on.

However, I think we\’ll take \”if you have your own currency you can’t default\” as being not true then, shall we?

9 thoughts on “Interesting claim by you know who”

  1. I didn’t realise he actively moderates comments to remove views which are not his own. As for the right to reply…what a clown.

  2. Dickie Murphie is not an economist. He graduated from Southampton Unitversity (wtf is that?, I need a map) . A real economics school (Chicago, Columbia, etc) would not even retain him to clean the toilets or operate the elevators.

    On a good day, he is a village idiot. On a bad day, he is a turd in the swimming pool. F*wit.

  3. “It has its own central bank, from whom it can borrow endlessly, if it wishes.”

    This sounds great. Why doesn’t the Government just print a lot of money and give everyone a million pounds? Then no one would need to work!

  4. Well, if you have your own currency and your debts are in your own currency, you can choose not to formally default, just one time. After that, nobody will allow you to have your debts in your own currency every again, and the effects of debasing your currency rather than formally defaulting will be much the same as defaulting.

    And when I say “nobody”, I mean nobody outside your own country, of course. Your own citizens can be forced to lend to you in local currency (ie robbed) regardless of what they want to do, as all the Argentines who had their US dollar denominated savings converted to pesos at an exchange rate chosen by the government discovered last time Argentina defaulted.

  5. Let’s not be rude about Southampton; it has a superb reputation in most engineering disciplines, notably Aeronautical and Naval.

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