Are there any loans or debts that the United States never fully paid?

by someguy4459

Hello all, My apologies as this is my first post on reddit, so I'm sorry if I'm making any mistakes. Anyways, a friend and I were talking about the debt that the U.S owes to China and he was concerned due to the relations with China, I said that the U.S will never pay back the debt owed to China, and eventually the conversation turned to how often is it for a Country to stop paying a debt or money owed to another country due to war and what not. I did some looking around on the subject but only found articles about the U.S debts to China, so I'm turning to reddit for help. TLDR: had a conversation on the U.S-China debt turn to wondering how often it is for a country to stop paying a debt

toastar5

This is a tough question to answer. Phrased as you have the answer is probably no but you need an asterix. But there are other similar questions that should be asked instead.

Has the US ever defaulted on it's debt. In that case technically the answer is yes, The definition of default is not failing to pay your debt, but failing to pay it on time.

The Us has used devaluation quite a few times in the past essentially back when dollars were worth a certain amount of gold, before paying back said amounts priced in dollars they said the dollar was worth a less amount of gold. There are 2 schools of though on this one is that a devaluation to avoid a default should be considered a default. The 2nd camp is that it is just inflation, and that if you consider that a default you should consider it to be a default every month when the US posts the inflation rate, or every 6 months when the fed sets the inflation for the bond rates at least.

Of course the ultimate deflation was the nixon shock where the dollar was essentially discounted down to zero.

So if your in the 2nd camp that doesn't count devaluation, you can still technically say the US defaulted. In 1979 the US had a glitch cutting checks for 120 million T-bonds interest went out late. The US ended up getting sued(Claire G. Barton v. United States) and settled whether or not they should pay extra interest. This actually caused a 60 basis point(00.6%) rise in the interest rate, which actually caused about 6 Billion in extra interest costs. I believe this is the only time this has happened since the US floated the dollar.

Technically the 1934 liberty bond default was a default for domestic holdings and a devaluation for holdings in foreign currency.

I probably shouldn't leave out that individual states have defaulted actually quite often. Just about every time you hear about a panic of<year> some number of states probably defaulted. 3 states in 1841-42, 10 after the panic of 1873.