After much speculation and commentary, EU talks with the new Greek government remain deadlocked.

The recent light yet serious public role play between the two finance ministers of Greece and Germany – Yanis Varoufakis and Wolfgang Schaeuble ended with no clear agreement on either side on a new plan of action with regards to Greek debt.

It seems the best the troubled EU nation can expect is a temporary air pocket of breathing room when it comes to implementing new structural adjustments or budget slashing. Even if these are agreed on, the question still rages: will Greece ever realistically be able to pay its large debt?

Greece is not alone in the high public debt club: at present, a number of developed economies are unhealthily overweight from debt gorging (high debt to GDP ratios) – Japan, Italy, Portugal, US, Spain and the UK to name a few.

Normally, public debt can be resolved in a number of ways: growth, inflation or default.

At the moment, neither growth nor inflation is sufficiently high to significantly improve most debt burdens. For example, even with its strong recovery, the FT predicts US debt to GDP ratio will move from 105.6% in 2014 to 103.7% in 2019. Falling oil prices and weak industrial demand have pushed certain countries into deflation and defaults are too politically unfeasible to take place (at least for now).

Is there any other way for governments to deleverage? Perhaps by using Financial Repression.

Certain indicators as well as historical experience hint it could be making a comeback.

Financial Repression is a poorly branded, old academic expression drawn from the 1970s and generally refers to attempts by governments to keep nominal interest rates lower than they normally would.

Several of its defining characteristics are: 1) caps or ceilings on interest rates (especially on government debt), 2) capital account restrictions, 3) high reserve requirements, 4) financial institutions (often domestic) having to hold government debt.

These policies represented the norm back in 1945 until the 1970s across the world economy, eventually phased out in favour of liberalizing financial markets. These were intended to liquidate the debt governments had accumulated during the Second World War. Certainly, it would appear that these measures are highly unlikely to take place now given the wealth of research that has suggested these procedures are more harmful than beneficial – whether because they reduce inefficiency or create a rent seeking environment for incumbents to take advantage of.

Yet in some way the intended effect of financial repression is already taking place. The combination of low interest rates and QE has arguably been very beneficial for both financial markets and governments. For the former, it has come in the form of “free cash” in exchange for government bonds and an increase of asset prices – partly contributing to strong equity performance. As for the latter, it has reduced the effective interest rate on public debt and kept public finances from becoming too strained.

Naturally, central banks are in theory independent institutions that control the money supply to target certain nominal indicators – whether they are inflation, unemployment or even nominal GDP. But it seems highly unlikely that someone like Mark Carney is seemingly unaware of the dual effects monetary policy is having both on financial markets and on debt repayment.

If public debt continues to fall at such a slow pace, is it possible for politicians and regulators to crank up the dial and enact more repressive measures?

The economist Carmen Reinhart has suggested this is a historical inevitability as there appears to be no other feasible option to reduce the debt burden.

Austerity has, arguably, not been very successful in its intention to restore growth, as either the GDP growth rates are still low or they have proven so unpopular that people are repudiating them – such as the case with Greece.

But is it all doom and gloom? The S&P still managed to thrive in the midst of the historical period of financial repression and sustained mild increases all the way up to 1973 (using 1950 as the starting point).

However, given the increased importance of the financial industry in the developed world economy and the globalisation of capital markets, we cannot accurately predict to what extent a new wave of financial repression will impact markets in the long haul.

More importantly, there is a new added element to be taken into account: private debt. Levels of private debt were extremely low after the Second World War and the ensuing consumption boom that involved leveraging no doubt contributed to stock market performance.

We still cannot accurately predict whether these events will pan out, but it could be a strong possibility given the current predicament.

Certainly if Greece cannot appease the ECB and wants to abide with its electoral promise of ending austerity, financial repression may be their only feasible choice.

Should they succeed and if other populist parties on the continent seize power, there is no telling what might happen?