Today is the end of World War I

[Post To The Left]

Germany is making the final payments on its Versailles Treaty Reparations. The 1932 Lausanne Conference was supposed to cancel out reparations but the Americans never passed it through their Congress. After World War II West Germany signed the 1953 London Treaty which said that it would settle the war reparations after the country became reunified. In 1990 they started making payments again finally settling the reparations this Sunday.

This brings up an interesting point as the United Kingdom and many of the victor nations that won World War I HAVEN'T paid their World War I debts to America off. After the Wall Street crash in 1933 President Hoover called for a temporary halt of payments to get the World economy going again. Then that whole World War II thing happened and the UK and most other nations just abandoned (Finland was the only to continue making payments ... suckers)

It makes me wonder as when the American's can't pay off its incredible debt in the future why won't they just follow the United Kingdom's example and just refuse to pay?

[bush_cheney2004]

War reparations are different from loan debt. The UK completed paying back WWII loans back in 2006, and any debt owed by the UK to America for WWI remain uncontested because of the allied relationship in many other military and political circumstances.

The American government has never defaulted on its debts, and it is this record that largely permits it to have such a very high credit limit!

[Michael Hardner]

PIK That`s very interesting - did you just know this or did you pick it up somewhere ?

Edited October 3, 2010 by Michael Hardner

[bush_cheney2004]

That`s very interesting - did you just know this or did you pick it up somewhere ?

[Oops..sorry...you didn't mean little 'ol me.]

The debt repayment story is all over wire services and web news:

http://www.dailymail.co.uk/news/article-1315869/Germany-end-World-War-One-reparations-92-years-59m-final-payment.html

It's not an obsure fact, just the result of how the US government finances debt and the monetary system. To avoid default all the US Congress has to do is raise the debt limit and print more dollars. American government carries no foreign curreny denominated debt.

Domestic and foreign buyers of debt still line up for US treasuries, notes, and bonds at auction....kinda like eBay.

Edited October 3, 2010 by bush_cheney2004

[jbg]

The American government has never defaulted on its debts, and it is this record that largely permits it to have such a very high credit limit!

The American government has never defaulted on its debts, and it is this record that largely permits it to have such a very high credit limit!

The 14th Amendment prohibits a default.

14. The validity of the public debt of the United States, authorized by law, including debts incurred for payment of pensions and bounties for services in suppressing insurrection or rebellion, shall not be questioned. But neither the United States nor any State shall assume or pay any debt or obligation incurred in aid of insurrection or rebellion against the United States, or any claim for the loss or emancipation of any slave; but all such debts, obligations and claims shall be held illegal and void.

[Post To The Left]

any debt owed by the UK to America for WWI remain uncontested because of the allied relationship in many other military and political circumstances.

UK never paid its World War I debts and it's all well and good for America to have a law that says they can't default but if they don't have the money what can they do. If I understand you correctly you're saying they can just print more money. Isn't that what lead Germany, Zimbabwe to have runaway inflation as in a loaf of bread costing 2 billion dollars?

/not an economist

[bush_cheney2004]

UK never paid its World War I debts and it's all well and good for America to have a law that says they can't default but if they don't have the money what can they do. If I understand you correctly you're saying they can just print more money. Isn't that what lead Germany, Zimbabwe to have runaway inflation as in a loaf of bread costing 2 billion dollars?

No...as you have already answered your own question. The loaf of bread cost $2 billion US dollars.

[Post To The Left]

No...as you have already answered your own question. The loaf of bread cost $2 billion US dollars.

So a loaf of bread costing $US 2 billion dollars is a good thing? ....how does that help with America's massive debts?

[bush_cheney2004]

So a loaf of bread costing $US 2 billion dollars is a good thing? ....how does that help with America's massive debts?

US debts are denominated in US dollars...not foreign currencies. A weak dollar policy actually helps to devalue the debt. Such monetary policy is used to have cake and eat it too. America has "massive debts"....because it can.

[Bonam]

debt owed by the UK to America for WWI remain uncontested

Sounds like this debt should be packaged up and sold. Sure fire way to generate a lot of money quick. Especially if the people buying it don't know what the heck they are buying, except that it's rated AAA. I mean it must be good if its based on a deal between two upstanding governments like the UK and the US.

[Post To The Left]

US debts are denominated in US dollars...not foreign currencies. A weak dollar policy actually helps to devalue the debt. Such monetary policy is used to have cake and eat it too. America has "massive debts"....because it can.

Ahhh so as it stands now America has 14 Trillion US dollars debt so if rapid inflation takes place and a loaf of bread is 2 billion US dollars then America can pay off all its debt for the same amount as buying a new TV. Except sure the American debt is paid off but everyone who has savings in American dollars have wiped out their saving and now have useless dollars.