According to Guan Jianzhong, the president of the Dagong Global Credit Rating Co Ltd the US is in default on its debt.
"In our opinion, the United States has already been defaulting" said Guan, as quoted by the Global Times. According to Guan, the US is defaulting by allowing the US dollar to weaken relative to other currencies.
Now, perhaps I don't understand the subtleties of this, but I thought the term 'default' was reserved for not meeting the specific terms of a loan contract. I tried to look up the defined value of a dollar -- as it is no doubt the stated unit of value said loans are denominated in -- but only found historical references such as "371 1/4 grains of silver". That definition is obsolete and current loans are written for the 'new dollar', for which no value definition exists at all.
So, a dollar is whatever official piece of paper (or colored zinc) says 'One US Dollar' on its face. Period.
So next I looked at my own stash. The currency in my pocket all says 'Federal Reserve Note', implying that someone, presumably at the Federal Reserve, owes me one US dollar for each dollars worth of 'notes' I hold.
The Sacagawea dollar coin, however, just says 'ONE DOLLAR' in big, bold friendly letters right on the back. Finally, a real US dollar! I'll bet I can get all my 'notes' redeemed for actual (Sacagawea) dollars on demand.
Are we refusing to redeem US bonds in Sacagawea dollars to China? Have they even asked?
Assuming that such a refusal is not the problem, what are they complaining about? Fiat currencies are designed to be inflated. That is the point. Inflation allows the government, courtesy of the Federal Reserve, to tax away a tiny slice of every dollar in circulation every time they print a new one in the big print room.
It's free money to the government -- and the citizens are, at most, barely aware that they are being taxed. Do the Chinese really expect the US government to resist the temptation to inflate the undefined dollar? Does any other nation on earth, including China, manage to avoid debasing their own fiat currency for more than a few minutes at a time?
I think not.
I do have one suggestion for Mr. Guan, however. Please stop debasing the language. Please stop inflating the definitions for the word, 'default'. We already have a perfectly good term for your innovative use of the word, 'default'. That term is 'working as intended'. |
| |
