Written by Chriss W. Street
The U.S. government defaulted after the Revolutionary War, and it defaulted at intervals thereafter. After the various branches of government resume talking and investors have recovered from its trauma of the risk of default, the Treasury will have no trouble raising the necessary billions of dollars to pay its bills, since the Federal Reserve can simply create paper money from its computer screen.
The newly formed United States in 1790 was in arrears on $11,710,000 denominated in foreign debt and payable in gold and silver. Alexander Hamilton, the first Secretary of the Treasury, duly paid them to cure the default in “dollars” that were defined as a little less than 1/20 of an ounce of gold. Continue reading