Default #4: The Liberty Bond Default and Gold Devaluation of 1934
The financing of the United States government stepped up to an entirely new level as a result of the cost of World War I. So starting in 1917, Congress issued “Liberty Bonds.”
The last bond issue, October 24, 1918, was a $7 billion, 20-year, 4.25% percent issue, payable in gold at a rate of $20.67 per troy ounce.
By the time Franklin Roosevelt entered office in 1933, the interest payments alone were draining the Treasury of gold. In addition, the country's total debt had climbed another $18 billion to $22 billion. Yet, the Treasury had only $4.2 billion worth of gold.
Also, during the Depression, Americans were attempting to redeem their dollars for gold and then hoarding that gold like crazy.
End result: President Roosevelt decided to default on the domestically-held debt by refusing to redeem dollars in gold and, instead, confiscating gold and then devaluing the dollar by 40%, which was essentially also a default on America's trade partners.

Default #5: Nixon Permanently Severing the Dollar's Link to Gold
On August 15, 1971, President Nixon abolished the dollar's link to gold. This was because there had been a run on the dollar in the late 1960s, since the United States was printing far more money than it could possibly back with gold.
So, foreign holders of our dollars wanted their gold, period. Nixon told them to take a hike and permanently severed the dollar's convertibility into gold.
In effect, it was a 100% devaluation of the dollar. Since 1971, the value of gold has soared from $35 an ounce to today's roughly $1,600. Which is merely another way of saying that the U.S. dollar has lost an amazing 97.8% of its value since 1971.
Put another way, in 1971, one U.S. dollar would have purchased you 1/35th of an ounce of gold.
Today, one U.S. dollar purchases just 1/1,600th of an ounce of gold.
And put yet another way, for every $1 Uncle Sam borrowed in 1971 that may still be an outstanding debt â€" he can now pay that debt back now with currency worth 1/1,600th of its former value.
Call it whatever you want, but as far as I'm concerned, that's an all-out default. In fact, any time the government devalues the purchasing power of its currency, it's a default, plain and simple.
So even if the government continues to pay its bills, as long as it's paying them with currency that it plans on being worth less, it's still a default.

Default #6: Ongoing: The Intentional, Further Devaluation of the U.S. Dollar
Despite the euro sovereign debt crisis being out in the open, the dollar is plunging in value against the Swiss franc, as well as the Aussie and Canadian dollars. Plus, it has just plunged to a 17-year low against the Chinese yuan.
This is all part of “Bernanke's Secret Debt Solution” for the United States. He knows darn well that we can never repay our debts without inflating them away ... by devaluing the dollar.
So do many others in Washington.
The SINGLE BEST thing you can do to protect your wealth is recognize this and take appropriate action by investing in asset classes that will preserve and grow your wealth.
Those asset classes are gold, natural resources in general, and Asian economies.
In fact, all the “great rebalancing” talk you hear out of Washington these days when they speak about the global economy is nothing more than code speak for devaluing the dollar even further, and largely to get Asia â€" and China, in particular â€" to spend more money.
Which is precisely what Asia is doing these days. Their economies are running on all eight cylinders!

The history lesson says the USA has defaulted before and will do so again to serve its purposes.Hence you should not run to the nearest bridge and jump off. Some pain may be ahead but  we will survive as we have at least 6 times before.triffid

Quote from: triffid on July 25, 2011, 09:34:42 AM
Default #6: Ongoing: The Intentional, Further Devaluation of the U.S. Dollar ...
This is all part of “Bernanke's Secret Debt Solution” for the United States. He knows darn well that we can never repay our debts without inflating them away ... by devaluing the dollar.
So do many others in Washington. ...

My late uncle told me that in the Great Depression, debts still had to be paid, they were just deferred at 1/10 to 1/50 (or so) so that the debt could finally be paid of when the economy improved. The rate made it 10 times as hard.


triffid said:

Quote
The history lesson says the USA has defaulted before and will do so again to serve its purposes.Hence you should not run to the nearest bridge and jump off. Some pain may be ahead but  we will survive as we have at least 6 times before.triffid

Well, I'll put it this way: When people are starving, they may think they have nothing to live for.  I regret to say it, but the Stalinist Communist takeover is a good example.  WWII is another.  People can act like rabid, starving wolf packs when there's food, shelter and comfort available.

@triffid,
How's your summer been in the heat?  Winter is coming, you know.  Can you rig up an OU system to heat your house?

--Lee