The current narrative whopper making the rounds in regards to our debt ceiling “crisis” is that the United States risks its first ever default, as in failing to meet its obligations.
Those of us who attended schools in the good, old days, when history was taught without a revisionist slant, would recognize this as an outright falsehood. Incredibly, most of today’s populace buys this pap without blinking an otherwise comatose eye.
A reason might be provided by a recent U.S. Department of Education release of the National Assessment of Educational Progress that finds a record low 13 percent of Grade 8 students are proficient in history. Even more laughable, “proficiency” as defined by the Education Department is scoring 58.8 percent or better on a standardized test.
That was failing when I went to school, yet now it is deemed “proficient.”
It all reminds of a 2006 movie, “Idiocracy,” in which an average man participates in a hibernation study, is forgotten, and emerges many years later the most intelligent man around due to a rapid decline in the overall population’s intelligence.
Back to defaults: The truth is, if we fail to pay bills beginning in say, June, this would be just another in a long line of U.S. defaults.
Defaults began with the birth of this nation. The Continental Congress took to issuing currency, ‘continentals,’ in 1775 to finance things and, before that printing press had ground to a halt, the currency had been devalued to worthlessness. As a new country, we also chose not to repay debt to foreign nations.
That, my friends, is a default.
Between the Revolutionary War and our Civil War, the federal government left currency creation and debt-building to individual states and banks, resulting in many defaults, just not, technically, federal defaults. Still, most would concede that all the states and banks were U.S. entities.
Fast-forward to the Civil War and the need for a federal currency was great, so the greenback was created in August 1861.
Five months later, January 1862, the U.S. defaulted on these by refusing to redeem greenbacks for the specified amount of gold. New greenbacks were issued, without gold redemption qualities, and these proceeded to trade in the open market at severe discounts to their face value as war fortunes waxed and waned. Eventually, these greenbacks also went away.
President Franklin Delano Roosevelt led a Great Depression default by devaluing the dollar and refusing to redeem World War I era Liberty Bonds for gold as promised.
In 1971, then-president Richard Nixon pulled off a similar default by ending the promise to redeem U.S. dollars for gold
And, in the longest-running, least-appreciated default, the purchasing power of the U.S. dollar has declined 97 percent since 1913, when the Federal Reserve was set up to address banking panics and to stabilize the currency.
Some stability, a 97-percent decline!
In 2023, the debt numbers are much greater, but the principle is the same. When debts become too burdensome to be repaid, they are defaulted upon.
Engineering a hyperinflation, and eventually paying back debts with relatively worthless dollars, technically would avoid a default. But, in truth, it would deny repayment in value, so that’s a default in my book.
Now you know our default history, even if most of the population remains blissfully ignorant.
Sam Ross Jr's site 