The Economic Consequences of the Peace

Spiegel Online: Germany will make its last reparations payment for World War I on Oct. 3, settling its outstanding debt from the 1919 Versailles Treaty and quietly closing the final chapter of the conflict that shaped the 20th century.

…in 1953, West Germany agreed at an international conference in London to service its international bond obligations from before World War II. In the years that followed it repaid the principal on the bonds, which had been issued to private and institutional investors in countries including the United States.

Under the terms of the London accord, Germany was allowed to wait until it unified before paying some €125 million in outstanding interest that had accrued on its foreign debt in the years 1945 to 1952. After the Berlin Wall fell and West and East Germany united in 1990, the country dutifully paid that interest off in annual instalments, the last of which comes due on Oct. 3.

It is surprising that Germans are not more Keynesian.


Maybe because Keynes was all wrong?

The CARTHAGINIAN PEACE or The Economic Consequences of Mr. Keynes

Yet they will still pay.

I think the reason there is a net flow of money from Germany to France via the EU is that the Germans approve of that state of affairs. And I can't help but think of deep historical explanations for that.

It seems that AFTER World War II the Allies finally got it right.

Keep the payments, but stretch them out a really long time to allow the German economy to recover.

Which, if any, countries still have outstanding debt from World War I?

The Telegraph's report on this helpfully explained...

"The bill would have been settled much earlier had Adolf Hitler not reneged"

I cannot comprehend why so many people fail to realize that it is by no means a reparation payment. It is the last payment of the sovereign debt issued in order to pay reparations. In other words, it was not an imposed or negotiated obligation (like reparations) but an obligation contracted by Germany absolutely freely. Media are trying to sensationalize and dramatize the story but shouldn't we keep closer to facts? To all interested I would recommend the old article by Sally Marks -

Now Germans can have a sigh of relief that their debt has been paid and now they are free.

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The amount owed, the principle, was in the billions and it was Gold denominated.

There cannot be economic stability unless

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