In a recent comment on my article predicting Treasury default, Bruce Ramsey asked,"When has a government ever defaulted on debt in its own fiat currency? It's difficult to imagine this." I'm reminded of a quotation from a 1991 Gordon Tullock article:"There is a myth that floated around the banking community not many years ago that governments do not go bankrupt. I cannot imagine who dreamed that one up."

Admittedly, looking at only defaults under fiat currency excludes all the notorious cases before the mid-twentieth century. So I decided to do a little research, and discovered that Standard and Poor's reports 84 sovereign defaults from 1975 to 2002. The following is from their list of States (along with the dates) that defaulted either on their domestic debt, on their foreign debt, or on both. I've excluded cases like Mexico (1982-1990), where the default was not on government securities but on foreign-denominated bank debt, which shortens the list considerably. But some governments, like Argentina's have had more than one default.

Angola (1976), Argentina (1982, 1989-1990, 2002-04), Bolivia (1989-97), Brazil (1986-87, 1990), Congo (1979), Costa Rica (1984-85), Croatia (1993-96), Dominica (2003-04), Dominican Republic (1975-2001), Ecuador (1999-2000), El Salvador (1981-96), Gabon (1999-2004), Ghana (1979, 1982), Guatemala (1989), Ivory Coast (2000-04), Kuwait (1990-91), Madagascar (2002), Moldova (1998, 2002), Mongolia (1997-2000), Myanmar (1984, 1987), Nigeria (1996-88, 1992, 2002), Pakistan (1999), Panama (1987-94), Paraguay (2003-04), Russia (1998-99), Rwanda (1995), Sierra Leone (1997-98), Solomon Islands (1996-2004), Sri Lanka (1996), Sudan (1991), Ukraine (1998-2000), Venezuela (1995-97, 1998), Vietnam (1975), Yugoslavia (1992), Zimbabwe (1975-80).

joe Bongiovanni - 8/8/2009

Is it more simple than this?
Can any government be forced to borrow more money than it is capable of paying back?
Why would any bank lend more money to a sovereign country than it could ever pay back?
The reason why sovereign nations can default and often do is because they are not in control of their money systems.
Such as in this country.
So, yes, we are very capable of defaulting on our debts as long as we are not in control of creating our money.
Were we to be in control of our money system, then we could create all the money needed by the nation for a growing means of exchange, and do so without creating any new debt.
The Chicago Plan for Monetary Reform.
Then we can't default on our debts.
The Money System Common.

Jeffrey Rogers Hummel - 8/7/2009

I must, however, concede that the Standard and Poor's report does show that the total value of sovereign default's in securities denominated in foreign currencies far exceeds the value of those denominated in the domestic currencies

Jeffrey Rogers Hummel - 8/5/2009

In fact, if you check the Standard and Poor's report to which I link, you will notice that more than half the listed defaults were on government securities denominated in the country's domestic currency.

cvd - 8/5/2009

Of course sovereigns have defaulted, but how many of those countries were issuing debt that was denominated solely in their own currency?

These countries defaulted because they had issued debt denominated in other currencies. Their ability to print their own currency was effectively nullified by the fact that they could not print the currency in which they had issued debt.

Hence default.