An interview by Spiegel with Harvard economist Carmen Reinhart, one of the co-authors of This Time is Different. A few noteworthy excerpts:
-"No central bank will admit it is keeping rates low to help governments out of their debt crises. But in fact they are bending over backwards to help governments to finance their deficits. This is nothing new in history. After World War II, there was a long phase in which central banks were subservient to governments. It has only been since the 1970s that they have become more politically independent. The pendulum seems to be swinging back as a result of the financial crisis." (This quote really reminded me of the idea I put out there that the distinction between fiscal and monetary policy is a false one these days.)
-"The best way to deal with a debt overhang is to never get into one. Once you have one, what can you do? You can pray for higher growth, but good luck! Historically, it doesn't happen -- you seldom just grow yourself out of debt. You need a combination of austerity, so that you don't add further to the pile of debt, and higher inflation, which is effectively a subtle form of taxation..."
