Source: Law & Liberty
by Bruno Meyerhof Salama
“The United States prides itself on never having defaulted on its federal public debt. And in formal terms, that claim holds up: obligations have been paid on time, in full, and in the currency promised. That’s no small achievement — and it sets the US apart from most other countries, as if Hamilton’s dictum still quietly defines the nation’s approach: ‘States, like individuals, who observe their engagements are respected and trusted.’ But that’s not the whole story. The US has found ways to erode the real value of those payments without breaking the legal terms of its debt. … When value is eroded without breaching the formal terms of repayment — whether by inflation, devaluation, or internationally coordinated monetary policy — the real value of the obligation is reduced. Legally, it’s not a default, but economically, it may be.” (04/29/25)