We Only Repudiate It to Ourselves

FDR famously said that government debt doesn’t matter, because “we owe it to ourselves.” In that case, Butler Shaffer helpfully asks, what’s the harm in default? We’re simply repudiating our obligations to ourselves.

Of course, default isn’t so bad even from a purely economic point of view.


  1. Just read your fine article through a second time and I must say that I can find nothing in it to disagree with.

    Getting any politicians whatsoever even to listen to this kind of talk, however, would seem to be well nigh impossible. They dwell in an unreality of their own making. Except for the lone wolf like Ron Paul, the disconnect is total.

    I often wonder whether they can see the suicidal course that they are on. Perhaps they have a comfy, spacious bunker waiting for them somewhere? But isn’t the sunshine better than living underground? I will never understand them.

    The picture is very bleak and discouraging. We just can’t seem to get any action to reduce the welfare/warfare state. The country seems to be in a state of perpetual war. In fact, I think that war is one of government’s favorite industries, and is a natural outgrowth of its unrestrained activities, its quintessence, if you will.

    The trouble is that this might end in WWIII, nuclear disaster in all. It will certainly end in a financial disaster. That, in turn, means social unrest, and that term could include any number of things, all of them unpleasant.

    I am sure that every Austrian would agree that money is a vital organ of civilization. There is no civilization without this organ. Right now, we are experiencing organ failure.

    Thanks again for the fine work. Let’s keep up the good fight and try to bring Americans to their senses, the better to resist Leviathan.

  2. Did you ever hear of such a tangled weave of nonsense in your life? I feel like Alice in Wonderland. Nothing is what it seems.

    I could improve on FDR, though. We don’t owe the debt “to ourselves”; loaning money to oneself is complete and total nonsense!

    Rather, we owe it to EACH OTHER, and in unequal amounts (they can’t possibly be in exactly equal amounts, can they? That’s insanity!). That’s a different kettle of fish!

    So, if I owe you $20, and you owe me $10, then I owe you the difference: $10. If I don’t pay you, it definitely DOES MATTER, and you will be on the warpath if I don’t pay you, since you can’t go on doing business at a loss, can you?

    Am I wrong?

    There’s another thing FDR did not think of.

    Government and the banks create money OUT OF NOTHING, BACKED BY NOTHING, but these magnificent nothings consume REAL THINGS and misallocate REAL GOODS and SERVICES that would have been far better allocated elsewhere. We are allowing real things to be used up in exchange for UNREAL, worthless things.

    How long can that con game go on before the economy swallows itself up into nothingness and exchanges between people cease because their money is worth nothing? Can people be conned forever?

    At some point, they are not going to cooperate any longer with this money scam and are going to rebel.

    I guess FDR didn’t think that part through.

  3. Something that’s always been strange to me, especially as I’ve come across it more and more in my research on financial institutions, is that most economists agree that different forms of intervention replaced processes of market discipline. And these economists agree that market discipline helps limit the misallocation of resources (or, at least, irresponsibility). But, then, when market discipline contradicts their own policies, despite otherwise acknowledging the value of these checks and balances, turn around and advocate overriding the particular process of discipline. What’s worse is that they then blame the correction on the disciplining mechanism, rather than on what the disciplining mechanism is trying to avoid more of.

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