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Sunday, September 15, 2013

‘Austerity’ should not be confused with pragmatism by Patrick Honohan, governor of the Central Bank of Ireland, Sep 10, 2013

h/t to Philip Lane . 
The article is here , worth reading all.
At the end of the second World War, Britain faced a crippling debt burden...Keynes presented three options...(3d option) "cancel debt" on the grounds...the British shipped Keynes to Washington in September 1945 to seek “justice”, to wit, the third option...  the creditors were both unimpressed and irritated by the line adopted by the British negotiators... 
Within two weeks Keynes was reduced to asking a shocked Whitehall for permission to reverse course and negotiate that tempting long-term loan (2nd 0ption). It took a further two months before even that was agreed – and on terms which were less favourable than had been hoped for.

History teaches pragmatism!

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