ABSTRACT
§ 1. The nature of the burden of a deadweight public debt is often misunderstood. The direct burden of an external debt is, indeed, a simple matter. During any given period the direct money burden is measured by the sum of money payments, for interest and repayment of principal, to external creditors, and the direct real burden by the loss of economic welfare, which these payments involve, to members of the debtor community. If the direct money burden is given, the direct real burden will vary according to the proportions in which various members of the community contribute to the required money payments. If these are made mainly by the rich, the direct real burden will be smaller than if they are made mainly by the poor. Putting it another way, the money payments are used by the external creditors to obtain goods and services, which would otherwise have been at the disposal of members of the debtor community. The latter are, therefore, deprived of goods and services to this amount, and the resulting direct real burden will depend on the way in which this deprivation is distributed.
