Zócalo Public Square

At $20 trillion, the national debt of the United States is already bigger than the American economy and rising fast because of $1 trillion annual budget deficits. Political brinksmanship around government shutdowns and extending the country’s debt ceiling has greatly raised the risk of default. So what would happen if the U.S. actually went off the fiscal cliff, and was unable to pay its debts? To answer that question, we have one historical data point: the great debt default of 1933-1935, when Franklin D. Roosevelt, Congress, and the Supreme Court agreed to wipe out more than 40 percent of America’s public and private debts. What were the consequences of that debt default for America and the world? What roles did gold, banks, and the Federal Reserve play in that crisis? And what does this history tell us about the risks and realities of an American default today? UCLA Anderson international economist Sebastian Edwards, author of American Default: The Untold Story of FDR, the Supreme Court, and the Battle Ove