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Bloomberg: US Risks Joining Nazis With Default

From Bloomberg:

U.S. Risks Joining 1933 Germany in Pantheon of Deadbeat Defaults

By John Glover | October 13, 2013

Reneging on its debt obligations would make the U.S. the first major Western government to default since Nazi Germany 80 years ago.

We thought we weren’t allowed to talk about Hitler or Nazi Germany?

Germany unilaterally ceased payments on long-term borrowings on May 6, 1933, three months after Adolf Hitler was installed as Chancellor. The default helped cement Hitler’s power base following years of political instability as the Weimar Republic struggled with its crushing debts.

In reality, Germany defaulted on its WWI reparations payments (which were mandated by the Treaty of Versailles) quite often in the 1920s and 1930s. And they repudiated these payments at the Lausanne Conference in Lausanne Switzerland on January 9, 1932, where it was agreed that Germany would stop paying reparations altogether.

Meanwhile, the Nazi Party did not become a majority in the German Reichstag until July 1932. And Hitler was not made Chancellor until January 1933.

But Bloomberg doesn’t mind a little revisionism to try to associate the Republicans with the Nazis. Even though it is now the Democrats who are trying to force a default.

However, there is some similarity here with the Weimar Republic. After all, Germany defaulted because of reparations, too.

The debt reparations piled onto Germany, which in 1913 was the world’s third-biggest economy, sparked the hyperinflation, borrowings and political deadlock that brought the Nazis to power, and the default…

Er, no. Hyperinflation was ended long before the Nazis came to power. A little thing called ‘The Great Depression’ caused Weimar Germany to end its reparations payments. And it also brought the Nazis to power.

Weimar Germany deferred payments, stopped transfers, reformed the currency and wrote down debt, wringing a series of agreements from its creditors before the Nazis repudiated the obligations in 1933…

And, the obligation was ended on January 9, 1932. Moreover, this isn’t ancient history. This is common knowledge for anyone with the slightest interest in recent history.

This article was posted by Steve Gilbert on Monday, October 14th, 2013. Comments are currently closed.

One Response to “Bloomberg: US Risks Joining Nazis With Default”

  1. mr_bill

    Shouldn’t the president be out there reassuring foreign creditors that the US won’t default on payments, even if the borrowing limit isn’t increased? Isn’t that what a leader would do? Isn’t that what somebody concerned about the Republic would do? It seems to me that if the issue is as important as nerobama says it is, that he might do some speechifying (he loves to hear his own voice) to make sure all these creditors don’t get “all wee wee’d up” about it. Then again, nerobama has never tried to talk down a “crisis” in his time as president.

    The thought that the US won’t be able to “pay its bills” if it doesn’t use borrowed money to pay them is kind of a ridiculous idea in the first place.


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