Sebastian Edwards on a forgotten episode in U.S. history

The United States Treasury Bill is an IOU issued by the federal government. It has long been considered a risk-free asset, and while it may not offer a high return these days, at least they promise your money back. After all, they say the U.S. has never defaulted on its debt in its 240-year history.

In studying the 16-year long saga of Argentina’s default (which began in 2001), UCLA economics professor Sebastian Edwards frequently heard this view expressed, only to discover that it was not true.

His new book, American Default: The Untold Story of FDR, the Supreme Court, and the Battle over Gold (Princeton University Press, 2018) documents a forgotten episode in which the U.S. technically defaulted on its debts in the form of President Roosevelt’s 1934 devaluation of the dollar.