So why was I paying 14% interest on my mortgage in the 1980's? Why was the state paying exorbitant interest on its borrowings in foreign currencies when the (relative) value of those currencies was going up due to Punt devaluation?

It's quite different if you are the controller of the World's reserve currency - you can more or less do whatever you want. But a small economy, dependent on foreign investment and with large scale foreign borrowings subject to wild exchange rate swings and v. high interest rates is in a very different position.

You can print lots of money and "the markets" just devalue your currency by the corresponding amount. In practice any medium sized hedge fund can game the system and make huge profits at your expense. There is a reason why Ireland was so keen on ditching the Punt.

Index of Frank's Diaries