Looming Treasury “default”: Theater of the absurd

posted by
July 6, 2011
Independent Institute
by Robert Higgs  
Posted in Commentary

"Have governments defaulted in the past? Of course, they have, on hundreds of occasions over the centuries. Have these defaults triggered 'catatrophic economic and market consequences?' No. When a government defaults, there are consequences, of course, including heightened reluctance of lenders to lend to the deadbeat government in the future or at least to lend at such favorable interest rates. Often partial payments of principal and interest are arranged or debts are restructured. The world keeps spinning. Has the U.S. government ever defaulted before? Yes, in 1933, by refusing to honor the gold clauses in its bonds, the Treasury engaged in a massive default." (07/06/11)



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