But the record says differently!
President Joe Biden recently tweeted that America is not a deadbeat nation.
“We pay our bills,” Biden said in a related press conference. “America has never defaulted on its debt. And we never will.”
Well. The President should be expected to know better. He was so very wrong that he even got blasted by fact-checkers on Twitter’s Community Notes.
One linked to a story in the San Francisco Examiner headlined, “A short history of U.S. credit defaults (You didn’t know it’s happened multiple times before?)”
According to the report, “Only a few months after Congress created the dollar, the government defaulted on the new currency. Happened in 1862.
“Five months after what was then called the “Greenback” was created in 1861, President Lincoln’s Treasury Department failed to redeem them in January 1862.”
Another linked to a Mises Institute article called, “A Short History of US Credit Defaults.” Among others, it points to defaults during Franklin Roosevelt’s administration including the Liberty Bond default of 1934. Better known and even more outrageous was Roosevelt’s decision “to default on the whole of the domestically-held debt by refusing to redeem in gold to Americans and devaluing the dollar by 40 percent against foreign exchange.”
Another response linked to a piece in The Hill that read, “The US has never defaulted on its debt — except the four times it did.”
It cited another default in 1968 when the US government defaulted “by refusing to honor its explicit promise to redeem its silver certificate paper dollars for silver dollars. The silver certificates stated and still state on their face in a language no one could misunderstand, ‘This certifies that there has been deposited in the Treasury of the United States of America one silver dollar, payable to the bearer on demand.’ It would be hard to have a clearer promise than that.”
The same article cites the severing of the dollar’s ties to gold in 1971 defaulting on “the U.S. government’s commitment to redeem dollars held by foreign governments for gold under the Bretton Woods Agreement. Since that commitment was the lynchpin of the entire Bretton Woods system, reneging on it was the end of the system.
It was, said President Nixon at the time, a temporary measure. This was 52 years ago… which reminds us of Milton Friedman’s observation that nothing is as permanent as a temporary government program.
If it were only Biden who is uninformed, that would be one thing. But we have seen a continuous flow of government officials who are utterly detached from reality. Janet Yellen testified in Congress that, “The U.S. has never defaulted. Not once.”
President Obama was shown to be utterly clueless on national TV when asked about the size of the US national debt.
If the American people keep sending people manifestly incapable of knowing or caring about their stewardship obligations, then maybe old H.L. Mencken was right when he said that democracy is the theory that the common people know what they want and deserve to get it good and hard.
As for us though, we prefer to be protected from inept politicians and the calamitous results of their policies.
That’s why we invest in gold and silver.