Versailles reparations created an impossible triangular debt structure.

Evidence

Etienne Mantoux was recognized among the circles of early neoliberals as a highly promising scholar, mostly through his essay on Keynes’s claim that Germany could not pay back the reparations demanded after the First World War. He argued the opposite (as did others among the early neoliberal economists, especially Rueff and Heilperin). Educated at Sciences Po in Paris as a student of Halévy’s, whom he admired and visited privately on a regular basis, he moved to London in the mid-1930s to study with Harold Laski and Hayek at the LSE. — Dieter Plehwe, Quinn Slobodian & Philip Mirowski (eds.), Nine Lives of Neoliberalism, 380 (#corroborates, via linked claim)

The boom-slump-stabilization pattern that characterized the world economy in the early 1920s hit France in a peculiar way. By relying on German reparations to supply a large portion of their budget, when payments were not forthcoming, the resulting budget deficits had to be met with higher interest rates to attract capital. In such a situation a reasonable policy would have been to raise taxes, which is precisely where democracy and taxes came together to produce inflation. — Mark Blyth, Austerity, 546 (#expands, via linked claim)

Categorization

• XREF: connects to: French reliance on German reparations forced interest-driven deficits and inflation. — Mark Blyth, Austerity: The History of a Dangerous…, 546; Early neoliberal economists disputed Keynes by arguing Germany could pay the reparations — Dieter Plehwe, Quinn Slobodian & Philip Mirowski (eds.), Nine Lives of Neoliberalism, 380

Broader Connections

• Early neoliberal economists disputed Keynes by arguing Germany could pay the reparations #corroborates (0.85) — Dieter Plehwe, Quinn Slobodian & Philip Mirowski (eds.), Nine Lives of Neoliberalism, 380
• French reliance on German reparations forced interest-driven deficits and inflation. #expands (0.82) — Mark Blyth, Austerity, 546