http://www.irisheconomy.ie/index.php/2010/12/01/barry-eichengreen-on-the-irish-bailout/#more-8831
I find Eichengreen's reading of the economics highly compelling, but the political options he lays out are not comprehensive. The nature of the political challenge facing the US and Europe is becoming more clear every day. We have to organise an international response that can control and limit bond markets or we will end up living in increasingly fragile societies continually vulnerable to economic shocks. To get to a political resolution we will need to work our way past some of what we think we learned from twentieth century history. We thought we learned that rights claims were more important than active citizenship, and that maintaining monetary stability was crucial to sustaining political stability. To dig our way out of debt bondage we will need to generate an international political movement that uses the legitimacy derived from democratic politics to revalue debt (in effect political rights will have to trump property rights). This will massively change the distribution of wealth by devaluing every asset in existence. How do we all feel about a world where what we earn has a greater effect on our wealth than what we own, including our house?
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