Theoretically, if the US went to war with a country who held its debts, does that affect the debt?
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11It strongly depends on who wins.– DanielNov 6, 2015 at 15:49
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What about during the war? Is interest paid?– PatrickNov 6, 2015 at 19:24
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It would be interesting to know how this has been handled in past wars.– Nate EldredgeNov 7, 2015 at 2:23
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Take a look at theatlantic.com/business/archive/2012/11/…. There is a very useful graph in my opinion. Note the drop around WWI.– DanielNov 7, 2015 at 3:17
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1Rather misses the fact that most government debt is held by private banks. Countries go to war with other countries, not with banks.– Dale M ♦Nov 7, 2015 at 4:33
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1 Answer
No.
US Constitution Amendment 14 Section 4 states:
"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. But neither the United States nor any state shall assume or pay any debt or obligation incurred in aid of insurrection or rebellion against the United States, or any claim for the loss or emancipation of any slave; but all such debts, obligations and claims shall be held illegal and void."
The important part is that the debt shall not be questioned. The amendment goes on to further state that rebellions and insurrections wouldn't add to the debt. I don't know if you can say that means parties to war would add to our debt if we took them over, but again, the important thing is that the validity of the debt...shall not be questioned.
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In the wake of the Iran hostage crisis, the United States froze Iranian government assets in the United States. In effect, any payments due on U.S. Treasury Bills held by the Iranian government were made into an escrow fund, instead of to the Iranian government.– JasperNov 9, 2015 at 8:13