“You may not know this, but the U.S. has actually defaulted a number of times already,” writes Chris Mayer this morning. He cites five instances:
1779: The government was unable to redeem the continental currency issued during the Revolutionary War
1782: The Colonies defaulted on the debt they took out to pay for the war
1862: During the Civil War, the Union failed to redeem dollars for gold at terms stated by the debt contracts
1934: FDR defaults on the debt issued to finance World War I, refusing to redeem it in gold. The dollar is devalued 40% against gold
1979: A bureaucratic snafu results in interest going unpaid on some small bills.
Indeed, most people don’t know that. It is also widely unknown that the US experienced two periods of hyperinflation — during the Revolutionary War, and during the Civil War — both times when the US abandoned gold as money and printed paper instead… just as we are doing now! HOLY COW.