Most explanations I've seen boil down to to "The US (or any other sovereign nation with control over their own currency) can print their way out of debt, it's literally impossible for the US to default." This ignores the devastating economic effects that printing such a huge amount of currency would cause (likely comparable to the effects of simply defaulting) and ignores the fact that sovereign nations with control over their own currency have chosen to default anyway (see Russia ~20 years ago for an example).
> Most explanations I've seen boil down to to "The US (or any other sovereign nation with control over their own currency) can print their way out of debt, it's literally impossible for the US to default."
Its impossible for the US to be forced to default.
Its quite possible for the US to make a political choice to default, and it has come very close to doing so.
Also, not only is it possible, but many countries have in fact chosen to default on debt denominated in their own currency, rather than subject their citizens to wild inflation and/or break norms around reserve bank independence. So, it could happen even if US is not forced to, I agree.
The Russian rouble was not free floating prior to the crisis. They tried to defy the iron triangle and paid for it. This is not a problem for the USA, since other currencies are denominated in terms of the dollar.
The reason it would be impossible for the US to default is that the US is not significantly in debt. Most of the federal debt is held domestically, meaning by the US. You can't be in debt to yourself.
>Most of the federal debt is held domestically, meaning by the US. You can't be in debt to yourself.
Sure, we can just inflate away the Social Security fund, but do you think the effects of this would be better or worse than simply defaulting? And nevermind the political optics of "We still paid what we owed to China but magic wanded away the debt to Grandma!"
