In fact, the rest of the world already is taking action - because they see our demise. We have fools preaching lies - that if we default it is "no big deal."
Fools.
In fact, the rest of the world already is taking action - because they see our demise. We have fools preaching lies - that if we default it is "no big deal."
Fools.
I agree that a default would be bad for the government and for the US$, but it is not unprecedented.
The basic definition of default is “failure to fulfill an obligation”. With this definition, I argue that the US has defaulted at least three times in the past century.
First, in 1933, when it confiscated gold from US citizens. Prior to the confiscation, the US issued gold certificates, which promised payment in gold upon demand, as currency. The US refused to honor these certificates in 1933.
Following gold confiscation, the US issued silver certificates as currency. The US refused to honor silver certificates in 1964.
Even though US citizens were prohibited to own gold since 1933, the US represented that the US$ had a gold redemption value of $35/oz in international trade. This was reset several times at higher prices, and the US balked at making physical delivery against redemption. In 1974, the US formally refused to honor its gold redemption promises.
Each of these earlier cases is “failure to fulfill an obligation”.
Governments have a very long history of disappointing their creditors and those who use its currency. The US government is no exception.