Wednesday, July 24, 2013

The Anti-Default Pomposity of U.S. Officials

By, Chris Rossini

White House Press Secretary, Jay Carney, whose sole job is to spin, dropped a doozie yesterday:
"We are the United States. We do not default. It is unthinkable for the greatest country on Earth to default for the first time in its history. And I believe that Republican leaders share that conviction, and the President believes that Republican leaders share that conviction."
A denial of truth, sprinkled with a dash of "American Exceptionalism."

Hire this man!

The truth is that default is not something new for the U.S. It has already been done in the past.

Prior to 1971, foreign central banks, that were holding dollars, were able to turn them into the U.S. Treasury in exchange for gold.

The ability to exchange the dollars for gold was to act as a check on the U.S. -- 'Don't go crazy in printing those dollars, or we'll turn around and exchange them for the gold you have.'

Well, the U.S. would see about that.

Foreign Wars and LBJ's Great Society would put the theory to the test. The guns and butter required lots of scratch, and foreign central banks came to the conclusion that it was time to go for the gold.

By 1971, the U.S.'s gold stock had dwindled significantly!

It reached the point that in August, President Richard Nixon was faced with a choice: Let the foreign central banks drain the gold completely, or the U.S. could keep the gold that was left, and stick the foreigners with the paper.

Nixon chose the gold. Yes, when the rubber met the road, that "barbarous relic" was better to have then some paper money with pictures of former U.S. Presidents on them.

To put it plainly, "the greatest country on Earth" defaulted.

Foreigners got the shaft.

Today, U.S. pomposity has reached new heights, and the situation for foreign nations is even worse. They keep manufacturing goods, and the U.S. government's Fed keeps manufacturing the electronic digits to pay for them.

What a sweet deal for Americans!

The U.S. government thinks that this deal can go on forever, while also maintaining a military empire that polices the world.

All of monetary history says that it can't (and won't) last. And P.S. - As always, the smart ones will be those that have the gold.

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  1. Sometimes I wonder if this clown, Carney, actually believes the BS he is peddling.

    Will we default again? Yes, unequivocally. It's a mathematical certainty.

  2. I have forgotten the exact rule. How many times must a thing be denied before it becomes the truth?