The national debt has to be repaid – in some centuries time when interest rates are zero!

econoblog101

The NY Times has recently written about the British retiring some pretty old debt. I had to add a half sentence to the text, I just had to (in bold):

After that financial crash in 1720, called the South Sea Bubble, the British government was forced to undertake a bailout that eventually left several million pounds of debt on its books. Almost three centuries later, Britons are still paying interest and those that own the bonds are receiving interest on a small part of that obligation.

Now, prompted by record low interest rates, the British government is planning to pay off some of the debts it racked up over hundreds of years, dating as far back as the South Sea Bubble.

Apart from the fact of the omission of those receiving the interest, this fact of debt repayment is very interesting. Many economists in Europe claim that government debt has…

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