Check your history on U.S. debt defaults

NEW YORK (Oct 20)   Famous media pundits continue (1) to conflate our country’s not raising the debt ceiling with default and (2) to assert that the U.S. has never defaulted on its debt.  Both are flagrant errors.

Not raising the debt ceiling merely means not borrowing more than the $17 trillion that we already owe.  Monthly flows of tax receipts are many multiples of what is needed to pay the interest on our debt.  Thus not raising the debt ceiling does not remotely imply default.

In 1933, Franklin Roosevelt defaulted on U.S. debt (mostly Liberty Bonds which people patriotically bought to finance World War I) payable in gold at $20.67 per ounce.  Roosevelt devalued the U.S. dollar from 1/20 ounce of gold to 1/35 ounce, and took away American citizens’ freedom to own gold.  Foreigners who were allowed to be paid in gold took a 40 percent haircut. U.S. citizen bondholders took a bigger loss, getting their reduced payments in continually depreciating dollars.

In 1862, Abraham Lincoln defaulted on the Greenback five months after it was issued, refusing to redeem the Greenback in gold as promised.

How is it that media pundits, many with Ivy League educations, learned so little of this important part of history?  They seem blind to the many instances of government dishonesty. Perhaps CNN, CBS, NBC, etc. have become in essence akin to Pravda in the old Soviet Union.

Source:   WILL FERRELL