This occurred as part of a bigger shake-up following the collapse of the war reparations regime on Germany under the Versailles Treaty. The US itself imposed haircuts on its own creditors worth 16pc of GDP in April 1933 when it abandoned the Gold Standard.
Financial repression can take many forms, including capital controls, interest rate caps or the force-feeding of government debt to captive pension funds and insurance companies. Some of these methods are already in use but not yet on the scale seen in the late 1940s and early 1950s as countries resorted to every trick to tackle their war debts.
The policy is essentially a confiscation of savings, partly achieved by pushing up inflation while rigging the system to stop markets taking evasive action. The UK and the US ran negative real interest rates of -2pc to -4pc for several years after the Second World War. Real rates in Italy and Australia were -5pc.
Both authors of the paper have worked for the IMF, Prof Rogoff as chief economist. They became famous for their best-selling work on sovereign debt crises over the ages, This Time is Different: Eight Centuries of Financial Folly.
They were later embroiled in controversy over a paper suggesting that growth slows sharply once public debt exceeds 90pc of GDP. Critics say it is unclear whether the higher debt is the problem or whether the causality is the other way around, with slow growth causing the debt ratio to rise to faster.
The issue became highly politicised when German finance minister Wolfgang Schauble and EU economics commissioner Olli Rehn began citing the paper to justify eurozone austerity policies, over-stepping its more careful claims.
Critics says extreme austerity without offsetting monetary stimulus is the chief reason why debts have been spiralling upwards even faster in parts of Southern Europe.
The weaker eurozone states are particularly vulnerable to default because they no longer have their own sovereign currencies, putting them in the same position as emerging countries that borrowed in dollars in the 1980s and 1990s. Even so, nations have defaulted through history even when they do borrow in their own currency.