Friday, October 4, 2013

Actually, the U.S. Has Defaulted Before

The Atlantic points out at least three occasions that the U.S. defaulted on its debts:

First, following the formation of the new republic, the United States "restructured" its debt (similar to what Greece recently did with its debt), resulting in much of the debt being written off.

Second, in 1933, FDR devalued the dollar against the gold. Even though debts had a "gold clause" requiring that public debts be repaid in gold, the government ignored it, essentially paying back debts at a devalued (or discounted) amount.

Third, in 1979, due to a computer glitch, the U.S. failed to pay interest on $122 million in Treasury bills. The government was later sued for breach of contract and forced to pay damages and interest.

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