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The United States reached a two-party agreement in principle
Hello everyone, here is "majestic thinking".
Not surprisingly, the United States once again agreed unsurprisingly to raise the White House government debt ceiling, which will be raised again by $31.4 trillion.
A so-called debt crisis was easily resolved.
In fact, the debt default is more like a double reed show performed by the two parties of US imperialism, and the audience is the governments of the world that hold US debt.
Everyone has long known the routine of the US imperialism.
So why did the United States go to great lengths to put on such a play? What is the purpose? Will the U.S. government really default?
Today, the editor will talk to you about it.
Three defaults on debt in U.S. history
What many people don't know is that the U.S. government has actually defaulted on its debts more than once, three in total.
First default: 1790
At that time, in order to win the war of independence, the United States owed a large amount of domestic and foreign debt, mainly from France, which supported American independence, and European bankers who hoped to make a fortune from it, such as the Rothschilds.
However, although the United States won the War of Independence and officially separated from Britain and became an independent country, after the war, the US government faced an empty treasury, a plummeting currency value, and its financial income was unable to make ends meet, and it was difficult to repay its debts.
So soon after, in 1790, the U.S. government defaulted on its debt.
To solve the crisis, Alexander Hamilton, the first US Treasury secretary and Washington's right-hand man, proposed a solution: borrow new debt to pay off old debt.
The crux of the matter is that if the old debt has not been paid, who wants to borrow new debt to you?
Hamilton came up with a brilliant solution, and first the government came forward to set up a bank: the First United States Bank of America, with a registered share capital of 10 million.
However, the U.S. government owns only one-quarter of the shares, and only $500,000 of the 2.5 million shares actually went out in cash, and the remaining $2 million was spent on newly issued government bonds.
The remaining 75% of the equity is open to businessmen in the society.
More crucially, businessmen are also allowed to use their holdings of U.S. government bonds to buy shares, but only if they are exchanged for new debt.
Hamilton on $10
With old government bonds that could be lost, and the National Bank of China on the other, capitalists with a keen sense of smell quickly exchanged new bonds and turned into partners in the U.S. government.
With this tumultuous operation of "debt-for-equity", Hamilton not only eliminated the crisis of old bonds, but also established credibility for the government's new bonds, and also established a new national bank to help the government collect taxes, issue loans to the government, and more importantly, tie capitalists and the government to the same boat.
Of course, Hamilton had other financial measures, including central banking, tariffs, excise taxes, the bullion standard, and financial trade, which together built a monetary and financial system for the U.S. government.
It is also on the basis of the monetary and financial system built by Hamilton that the financial system of the United States gradually developed and eventually grew into a dollar hegemonic system that dominated the global economy.
Second default: 1933
Hamilton's financial system has been running steadily for more than a hundred years, and the United States has not defaulted on its debt.
It wasn't until 1929 that an economic crisis rarely seen in American history erupted, further triggering the worldwide Great Depression.
In response to the Great Depression, President Roosevelt banned the circulation of gold, forced the depreciation of the dollar, and banned private holdings of gold and shares of private reserve banks, resulting in a second default on the US debt.
This debt default was eventually settled when the government resumed interest payments.
Third default: 1971
President Nixon
In 1971, the United States was in the late stages of the Vietnam War and large-scale social welfare programs (known as the New Deal), and the government faced high inflation, large fiscal deficits, and international currency problems, which led to a decline in US gold reserves and a recession.
In response to the crisis, the Nixon administration banned private gold holdings and stopped the exchange of dollars against gold, which led to a realignment of the global monetary system and a third debt default on the United States.
It was also the last recorded debt default in U.S. history.
Because it was in this debt crisis that the US government found a new way to never worry about debt again.
1971: Hegemony established, debt transfer
In response to the third debt default, in 1971, the United States directly abandoned the gold standard, abolished the direct exchange of the dollar and gold, and replaced it with a financial system based on a free-floating exchange rate system, thus abolishing the gold-linked Bretton Woods system.
This move completely changed the international monetary system, making the dollar gradually become a global reserve currency based on sovereign credit, and the dollar became the world's hard currency.
And the U.S. government no longer has to worry about defaulting on its debt.
On the one hand, the United States has become one of the leading players in the global economy, and can control the global currency circulation by controlling the dollar, and by issuing additional dollars, it can calmly deal with various risks in the domestic and international markets.
On the other hand, the free exchange rate system also reduces the risk of fluctuations in the exchange rate of the US currency, and the US can also use its economic policies to influence global markets, dilute and transfer its own debt.
Therefore, although the US debt is getting bigger and the fiscal deficit is reaching new highs, as long as the US dollar remains the global reserve currency, and as long as other countries still trust and reserve the US dollar, the US government can continue to raise the debt ceiling without facing the risk of debt default.
Because of this, the United States has not defaulted on its debt since 1971, and even the 2008 financial crisis has allowed the United States to recover quickly from the crisis by transferring risks to the rest of the world.
The subprime mortgage crisis of 2008
Debt default now: a means of bipartisan fighting
Since the United States never fears defaulting on its debt, what is the point of this debt ceiling? What is the purpose of America's painstaking performance?
On the one hand, it is natural to give countries around the world a reassuring pill, so that the United States can continue to use the blunt knife of the dollar to cut meat and boil a frog in warm water to loot global wealth.
The main reason is that the current debt crisis has actually become a tool for negotiating the interests of the Republican Party and the Democratic Party in the United States.
Each increase in the debt ceiling requires congressional approval, and it is difficult to raise the debt ceiling if Congress does not.
In other words, it is always the ruling party that is in a hurry, and the opposition party takes the opportunity to use seats in the Diet to expand its own interests.
To solve this problem, the U.S. government needs to lead full debate and consultation to develop an acceptable policy solution.
As the differences between the two parties gradually widen, this kind of good drama will be played out frequently.
epilogue
Often walk by the river, where there are not wet shoes.
Today, the countries of the world are well aware of the tricks of the United States, but they do not have the strength and courage to confront.
As the saying goes, the world has suffered for a long time.
The old order is disintegrating, and a new one is taking shape.
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