Repudiate Sovereign Debt
A fascinating essay by Murray Rothbard takes issue with the idea that public debt is of same nature as private debt. When a private person contracts to borrow money, he is entering into an obligation to repay the money – in the full knowledge of the terms of the loan.
However, when the state borrows money, it is not the politicians who are taking on responsibility for paying back loans, but the taxpayers. Trouble is, the taxpayer is never consulted and is not a willing partner to the contract.
The fact is, governments borrow money using their taxing power as the basis for their creditworthiness. When someone invests in a government bond, they are doing so because they believe the government in question has enough guns to enforce taxation – and therefore repay the debt.
The essential point is this: the hapless taxpayer finds himself liable for a debt he did not sign up to, did not authorise. So the moral solution to the sovereign debt crisis is to simply repudiate it – refuse to pay it back.
The Greeks are about to find out the true cost of government borrowing – in the hardship they endure as a result of being forced to pay it all back.
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