Kerby Anderson![never miss viewpoints](https://pointofview.net/wp-content/uploads/2016/08/never-miss-viewpoints-e1476134799285.jpg)
Each year the federal government adds more to the national debt, causing serious concerns about how the president and Congress will deal with it. Many of the social and cultural issues facing us are unprecedented. At least with the national debt, we do have some historical examples provided by economist Kevin Hassett.
When Rome began the First Punic War, its coins contained 12 ounces of metal. After the war, Rome reduced the metal content of its currency to 2 ounces. By the end of the Third Punic War, coins only had a half ounce. This is a classic example of currency debasement.
Sometimes massive debts lead first to debasement and then default. After World War I, the allies extracted heavy reparations from the Germans. Over time the deutschmark dropped in value and eventually was worth a trillionth of its initial value. When Germany was no longer able to pay its debts, it defaulted.
One historical review of 176 sovereign nations found that there have been 248 defaults. But will the US become one of those nations? Kevin Hassett reminds us that has happened in the past and might happen again in the future. If default is not an option, then debasement of the currency is the only other option.
He believes the flight from dollars to other commodities (like gold and bitcoin) illustrates those concerns. He reminds us that, “At the start of the previous administration, the price of gold was about $1,200 per ounce. Today it is closing in on $2,000.” In 2017, Bitcoin “was trading at $1,000 per coin” and now is trading at nearly 30x that amount.
As the US debt continues to climb, the government has the only option that is available to other countries: debasement of the currency.