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Licensed Unlicensed Requires Authentication Published by De Gruyter May 9, 2023

Long-Term Strategies to Reduce Public Debt from a Historical Perspective

  • Thomas Mayer EMAIL logo
From the journal The Economists’ Voice


Public debt can be reduced in three ways: (1) repayment; (2) default; and (3) indirect default through monetary financing accompanied by debasement or followed by currency reform. In the course of history, repayment was more the exception than the rule, default often the only available way when a government had no control over the currency in which it borrowed, and indirect default more the rule than the exception. In this paper we review the three ways of debt reduction with exemplary references to historical events. We conclude that financial repression supplemented with debt repayment is likely to be the preferred way for public debt reduction today. The alternative would be currency reform.

JEL classification: E0; E; H; H3; H6

Corresponding author: Thomas Mayer, Witten/Herdecke University, Alfred-Herrhausen-Straße, 5058455 Witten, Germany, E-mail:
Founding Director of the Flossbach von Storch Research Institute.


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Received: 2023-03-22
Accepted: 2023-04-06
Published Online: 2023-05-09

© 2023 Walter de Gruyter GmbH, Berlin/Boston

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