One Hundred Years of Default

"It is my duty to myself and to any man who is working for me that he honor all his contracts."
--James Duncan MacHardie (From the Terrace)

The judge observes that we have defaulted at least 3x in the past 100 years. Default in this context is the failure to pay a debt obligation.

In 1933 the FDR administration took away the dollar's domestic link to gold, thereby defaulting on the federal government's obligation to permit US citizens to convert their paper currency to precious metal at the citizens' discretion.

In 1968, the Johnson administration took away the dollar 'silver certificate's link to silver, thereby defaulting on the federal government's obligation to to permit holders of silver certificates to convert their paper currency into silver.

In 1971, the Nixon administration took away the dollar's link to gold in payments to foreigners (want to watch a president really squirm?), thereby defaulting on the federal government's obligation to permit foreign holders to demand payments from the US government in gold.

If we broaden the definition of default to include paying back debt obligations in a devalued currency that provides creditors less value than when the contract was actually written, then we have been defaulting almost continuously on our debt obligations for nearly 100 years.

Our choices ahead of us are these: a) shrink government dramatically, or b) default again.

position in gold, silver, USD