Who Says the US Government Hasn't Defaulted on its Debt

The following list was taken from the article "Who says the U.S. has never defaulted?" by Larry Edelson, available by clicking on the title. They are listed here in reverse chronological order to show that not only has the U.S. defaulted, it has defaulted in our recent history, and is currently defaulting with each increase in the dollar supply that is made by Bernanke and his crowd.  The source: http://www.uncommonwisdomdaily.com

The United Sates Has Effectively
Defaulted At Least Six Times

Default #6: Ongoing: The Intentional, Further Devaluation of the U.S. Dollar

Despite the euro sovereign debt crisis being out in the open, the dollar is plunging in value against the Swiss franc, as well as the Aussie and Canadian dollars. Plus, it has just plunged to a 17-year low against the Chinese yuan.

This is all part of “Bernanke’s Secret Debt Solution” for the United States. He knows darn well that we can never repay our debts without inflating them away … by devaluing the dollar.

Default #5: Nixon Permanently Severing the Dollar’s Link to Gold

On August 15, 1971, President Nixon abolished the dollar’s link to gold. This was because there had been a run on the dollar in the late 1960s, since the United States was printing far more money than it could possibly back with gold.

So, foreign holders of our dollars wanted their gold, period. Nixon told them to take a hike and permanently severed the dollar’s convertibility into gold.

In effect, it was a 100% devaluation of the dollar. Since 1971, the value of gold has soared from $35 an ounce to today’s roughly $1,600. Which is merely another way of saying that the U.S. dollar has lost an amazing 97.8% of its value since 1971.

Put another way, in 1971, one U.S. dollar would have purchased you 1/35th of an ounce of gold.

Today, one U.S. dollar purchases just 1/1,600th of an ounce of gold.

And put yet another way, for every $1 Uncle Sam borrowed in 1971 that may still be an outstanding debt — he can now pay that debt back now with currency worth 1/1,600th of its former value.

Call it whatever you want, but as far as I’m concerned, that’s an all-out default. In fact, any time the government devalues the purchasing power of its currency, it’s a default, plain and simple.

So even if the government continues to pay its bills, as long as it’s paying them with currency that it plans on being worth less, it’s still a default.

Default #4: The Liberty Bond Default and Gold Devaluation of 1934

The financing of the United States government stepped up to an entirely new level as a result of the cost of World War I. So starting in 1917, Congress issued “Liberty Bonds.”

The last bond issue, October 24, 1918, was a $7 billion, 20-year, 4.25% percent issue, payable in gold at a rate of $20.67 per troy ounce.

By the time Franklin Roosevelt entered office in 1933, the interest payments alone were draining the Treasury of gold. In addition, the country’s total debt had climbed another $18 billion to $22 billion. Yet, the Treasury had only $4.2 billion worth of gold.

Also, during the Depression, Americans were attempting to redeem their dollars for gold and then hoarding that gold like crazy.

End result: President Roosevelt decided to default on the domestically-held debt by refusing to redeem dollars in gold and, instead, confiscating gold and then devaluing the dollar by 40%, which was essentially also a default on America’s trade partners.

Default #3: The Greenback Default of 1862

In August 1861, to fund the Civil War, Congress created a new currency which became known as the “greenback” due to the green color of its ink.

The original greenbacks were $60 million in demand notes in denominations of $5, $10, and $20 — redeemable at any time at a rate of 0.048375 troy ounces of gold per dollar.

But in January 1862, only five months later, the U.S. Treasury defaulted by refusing to redeem them on demand.

Later, the Treasury issued “greenbacks as non-redeemable legal-tender.” They traded hands at discounts from the original greenbacks of as much as 40%.

In effect, the currency was devalued by as much as 60% to finance the Civil War.

Default #2: The Default of 1790

In addition to its currency issuance, the Continental Congress borrowed money both domestically and abroad. The domestic debt totaled approximately $11 million Spanish dollars. The interest on this debt was paid primarily by money received from France and Holland as part of separate borrowings.

When foreign lending dried up, Congress defaulted on its domestic debt starting on March 1, 1782 — by refusing to pay and, instead, accepting the notes for payments of taxes.

By 1790, Congress repudiated these loans entirely.

Default #1: The Continental Currency Default of 1779

Largely to fund the Revolutionary War, the Continental Congress of 1775 issued notes totaling 241 million Spanish milled dollars over roughly a two-year period.

They were the first of the so-called “Continental dollars.” But since Congress had no power of taxation, it made each of the then-13 states responsible for paying them off, prorated based on their population.

But the states couldn’t pay them off. So in November 1779, Congress agreed to redeem the notes — with currency worth less than 1/38th the Continental’s original value.