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Freeman (1996, American Economic Review 86 (5), 1126 1138) is the first to formulate a model in which (i) debts are repaid with money and (ii) there can arise liquidity problems which give rise to a role for a central bank discount window.
It was a demand that Germany and Turkey repay their World War I debts in full b.
Germany's post-World War I debts—ironically, incurred by a regime lacking the democratic legitimacy to collect taxes led to immense popular suffering and social turmoil and caused the Great Inflation, the ur-trauma lying behind modern Germany's most notable economic obsession.
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