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View Diary: There will be no default on the national debt (113 comments)

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    Odysseus, cotterperson, Sparhawk

    US defaulted on international trade settlement of gold Aug 15, 1971 as decreed by the Bretton Woods agreement of 1948.  By executive order Nixon technically defaulted on all US international trade 'obligations' by reneging on the agreement for settlement in gold (or fiat dollars).  FDR's raising of the 'fixed' price of gold in 1934 was a decreed devaluation of 'money' but that is another story.  Kissinger convinced the OPEC countries to accept the fiat dollar in the 73-74  oil embargo, another 'side effect' from the technical default.

    In 1979, capital flows were starting to pile into precious metals after almost a decade of stagflation from Nixon's actions (often blamed on Carter), Volcker had to ramp up interest rates to divert capital flows back into the dollar.  They can't do that this time, default would be almost immediate given the massive level of short term debt rollover needed to keep the ponzi going.

    "History records that the money changers have used every form of abuse, intrigue, deceit, and violent means possible to maintain their control over governments by controlling the money and its issuance." -James Madison

    by FreeTradeIsYourEpitaph on Thu Dec 27, 2012 at 09:33:21 AM PST

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