Please do remember that government default to debt on central bank is anticipated!!!!, in other words, there is no goverment debt to central bank in practice, it is a case of pure money financing fiscal deficit....anticipated, since agents do no expect goverment to pay these type of "debts". Alexander Guerrero Fred Foldvary wrote: > > > Has anyone come across a paper available on the net dealing with debt > default by a government > > > to their own central bank. > > From: "Alexander Guerrero" <[EMAIL PROTECTED]> > > I would say; it is not really a default, but a money financing budget > deficit. > > If the government defaults on its debt at time T1, the budget deficit has > already taken place before T1. Therefore, the default at T1 is itself not > a deficit. The default reduces the budget expenses of the government, so > after T1 it can more easily have a balanced budget, and if it does so, the > default has helped eliminate future budget deficits, especially since the > government will not easily be able to borrow funds after T1. If the > central bank is forced to buy government debt after T1, then it is not an > independent central bank, but in effect a branch of the treasury department > issuing fiat currency. > > Fred Foldvary
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