- 1968: San Jose Protocol… 5 nations agreed to increase tariffs by 30%. This would raise both protection and tax revenue.
- States resorted to deficit financing. Domestic saving limited, money creation caused inflation… so they turned to international credit markets.
- What are the two economic “gaps” this created during the 70’s and early 80’s?
- What happened when Mexico declared a moratorium on debt payments in 1982?
Note: When the Nicaraguan government borrowed money internationally, and the majority of it went into the pocket of Somoza and his cronies, the debt is considered to belong to Nicaragua as a nation, which means that the “nation” is supposed to repay it.
- This technicality was completely ignored until the 1990s and early 2000s and led in the 1970s and 1980s to the entrenched trend of transferring income from the poorest to the richest within and among nations.