Oddbean

No, just say existing bondholders aren't getting anything above 2%. Then the interest expense goes to very low. Then cut spending so it's 100% funded through tax receipts. No additional debt issuance necessary. So maybe likely in the next few years then

Like I was saying, this is legally (and functionally) impossible. Legally, because it violates the contract law that the US (and others) depend on to run their international bond markets. Full stop. Functionally, because the second they tried such an obviously “banana republic” move, there would be a complete collapse in the price of the entire medium to long end of the yield curve. As in “Game Over”. Requiring the FED to print 100s of trillions to mop up the blood bath of the collapsed tsy market and likely all bond markets dependent on the tsy market for reference like mortgages and corporates. Much more likely, as external buyers for longer US govt paper continues to dry up while yields drift higher, the Fed will be forced to re-initiate some form of QE (infinity) to pick up the slack and keep rates under control. I (and others like Larry Lepard/Preston Pysh) expect this to be coming very very soon. Possibly even before the e end of this calendar year. Very very bullish for Bitcoin and Gold.

'Legally impossible'😂 Cute. As I said, the us govt won't care. It's a one shot kill. The interest expense is virtually cancelled, and the us govt can reissue new bonds (even in a new currency) at what rates it wishes. What happens when an individual or corporation goes bankrupt? Same concept.

I for one would not. Lending to people who just defaulted is not high on my list of things to do. Additionally, the default would have absolutely smashed the economy with all banks and pension funds being wiped out.