It's a stupid phrase.
"............We hear repeatedly these days that the United States has never yet defaulted on its debt. In his July 11 news conference, President Barack Obama himself said so. Congressional failure to raise the country’s debt ceiling, he said, would threaten U.S. full faith and credit “for the first time in our history.” But the assertion is not true. In commentary posted last week on the website of the Alabama-based Ludwig von Mises Institute, John S. Chamberlain reminds us that the United States has defaulted on its debt a number of times.
In the decades after the Revolutionary War, Congress left public finance to private banks and issued only limited debt. In 1861, however, Congress created a paper currency – “the greenback” – to finance the Civil War. The first greenbacks, $60-million in demand notes, were declared redeemable at the rate of 0.048375 troy ounces of gold per dollar. The Treasury defaulted on these notes within five months yet kept issuing more of them. The greenback routinely traded throughout the war at a discount of 40 per cent.
During the Great Depression, the U.S. defaulted again, this time on debt incurred during the First World War. In 1917-1918, the U.S. issued its famous Liberty Bonds, 20-year debentures that paid 4.25 per cent and were proclaimed redeemable in gold at the rate of $20.67 per troy ounce. By 1933, however, the government had $22-billion in bonds set to mature in 1938 – and only $4.2-billion in gold to redeem them.
President Franklin Roosevelt defaulted on much of this debt, devaluing the dollar by 40 per cent – and, as Nobel economist Robert Mundell has argued, thus making the Great Depression worse and thus contributing to the causes the Second World War."