300 years of wars show they are ‘always disaster times’ for holders of government debt because of inflation and financial repression

March 20, 2026 - 22:08

Historical analysis spanning three hundred years delivers a stark warning to investors in sovereign debt: periods of war have consistently proven disastrous for bondholders. The primary culprits are rampant inflation and financial repression, which systematically erode the real value of government obligations.

During major conflicts, nations historically resort to printing money to fund military efforts, triggering inflationary spirals that decimate fixed-income returns. Simultaneously, governments engage in financial repression—artificially suppressing interest rates and directing capital—to manage their burgeoning debt burdens at the expense of creditors.

This long-term trend places government bonds in a surprising light compared to other asset classes. The research indicates that, through centuries of warfare, these supposedly safe-haven instruments have even underperformed equities and real estate, which are traditionally regarded as far riskier assets. The data suggests that in the theater of geopolitical strife, the greatest risk to capital may not be market volatility, but the fiscal strategies of the very states issuing the debt.