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State defaults in the United States are instances of states within the United States defaulting on their debt. The last instance of such a default took place during the Great Depression , in 1933, when the state of Arkansas defaulted on its highway bonds, which had long-lasting consequences for the state. [ 1 ]
By 1841, nineteen of the twenty-six U.S. states and two of the three territories had issued bonds and incurred state debt. [1] Of these, the aforementioned states and territory were forced to default on payments. Four states ultimately repudiated all or part of their debts, and three went through substantial renegotiations. [2]
A failure of a nation to meet bond repayments has been seen on many occasions. Medieval England lived through multiple defaults on debt, [17] Philip II of Spain defaulted on debt four times – in 1557, 1560, 1575 and 1596. This sovereign default threw the German banking houses into chaos and ended the reign of the Fuggers as Spanish financiers.
Here's a primer on the debt ceiling and examples of the possible consequences if the United States is unable to pay its debts. MORE: From Social Security to travel: Everything to know about a ...
4. Speculation. As investors try to earn a profit, their speculation on a currency’s value could cause the exchange rate to change. Suppose investors believe a nation’s money is overvalued.
Government Debt, Inflation & 7 Other Reasons Exchange Rates Change An exchange rate is how much of a given nation’s currency you can buy with a different nation’s currency.
The Congress shall have power . . .To borrow Money on the credit of the United States; Amendment XIV, Section 4. The validity of the public debt of the United States, authorized by law, including debts incurred for payment of pensions and bounties for services in suppressing insurrection or rebellion, shall not be questioned.
Often overlooked by retail investors, TIPS, or Treasury Inflation-Protected Securities, are U.S. government-backed, fixed-income securities that offer inflation protection – and often more.