Todd J. Stein: U.S. should do a 'soft' default on its debt by devaluing dollar


By Todd J. Stein
FOX Business, New York
Tuesday, March 19, 2019

Last month, the national debt Opens a New Window. surpassed $22 trillion -- or nearly $180,000 per taxpayer. That figure will roughly double within three decades, since spending on Social Security, Medicare, and Medicaid will balloon as America's population ages.

Such stratospheric debt levels will be completely untenable -- it'd be like saddling every taxpayer with an additional mortgage on top of his or her existing housing, credit card, and student loans. Most tax revenue would go toward interest on the debt, leaving little for safety-net programs, the military, or core government functions. By 2050 the federal government will spend more on interest payments than Social Security, health care, or national defense. ...

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Our leaders have dug us into a hole. And the best way out is a "soft" default on the national debt.

A hard default, where the government simply refuses to pay its debts, would cause a global economic meltdown. Dollar-denominated Treasuries and federal reserve notes are the lifeblood of the global financial system.

But a soft default -- a one-time devaluation of the dollar that enables the government to pay back its debts in full, albeit at a lower intrinsic value -- needn't be catastrophic.

Here's how a soft default would work. ...

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