The dollar needs high quality paper. I think there are not enough trees to print that number of Trillions dollars. Let us assume USA debts are $25 Trillion. I do not know the amount of USA treasuries. USA stocks say $2 Trillion. So USA needs to print $30 Trillion or $35 Trillion. A image of actual $1 Trillion was posted in elitetrader but cannot find it. $1 Trillion needs lots and lots of high quality paper. Here is what $1 Trillion looks like: http://www.pagetutor.com/trillion/index.html
Most money doesn't physically exist, except on computer screens. Ask yourself, how much of your purchases/credits you actually do in cash, including your salary and bills???
There are numerous pieces of very strong evidence that the US has virtually zero chance of bankruptcy in the foreseeable future. Examples: 1. US Treasury yields are not only no way near danger levels, they are in the low single digits. US CDS rates are extremely low. While this does not guarantee no bankruptcy (markets can be wrong), it means that bankruptcy proponents have a large burden of proof to overcome. Anyone who is not short 50%+ of their net worth in bearish US treasury bets simply should not even comment on the subject - put your money where your mouth is, or be quiet. 2. The US has one of the lowest tax burdens of any of the 1st world countries. Its revenues are a bit below 30% of GDP, compared to UK and Germany at around 36-40%, and Scandinavia at 45-50%. The USA could massively increase its tax burden to raise revenue, and still be less taxed than Germany, France, Norway, and other clearly solvent states. This would easily solve any solvency crisis, albeit at the cost of lower GDP growth while the high tax rates were maintained. 3. US debt is lower or similar as a % of GDP compared to many other countries that have not yet defaulted. Japan, Italy, UK etc. 4. The USA has the scope for gargantuan spending cuts in the military. The military budget is greater than the rest of the world combined, there are huge swathes of troops, tanks and artillery stationed in ludicrous places like Germany, where no war has a chance of occurring. The US has troops in Japan, a rich 1st world country that could easily have its own military to defend itself, and S Korea, which could do the same. It has troops in the Middle East, which could be withdrawn. The military budget could be cut by 50-75% and it would actually increase USA national security because there would no longer be blowback from foreign occupations and entanglements. 5. Other 1st world countries have recovered from far higher debt burdens without defaulting on their debts. For example, the UK after WWII. Simple logic says that if something has been done before, it can be done again. 6. The strongest of all - the US prints its own currency, and is the holder of the world reserve currency. Any obligations can easily be settled by simply having the Fed print dollars to pay them off. It is literally impossible for the USA to go bankrupt against its will, so long as it only issues debt in dollars, and retains a central bank. Put simply - if you think the US is going to be forced to default anytime soon, you need to go back to basics and study some economics and government finance textbooks until you bring your knowledge up to scratch. You are currently in a position of ignorance that can only harm your ability to make money, and be an educated person. A related point is that this means Ron Paul is simply not qualified to oversee the Fed. He is a doctor, not an economist, financier, or speculator. The only chance of US bankruptcy is if for some reason the government think it is politically expedient to default on their debt, rather than inflate it away, or cut spending and raise taxes to strengthen public finances. For example, if foreigners owned 80%+ of US Treasuries, then default might be politically more popular than inflation. However, the major holders of US Treasuries are US banks, pension funds, bond funds, individual savers, and so on. These would be totally hosed by a default. As a result, budget balancing measures, medium inflation (e.g. 5-6% like in the 70s) and currency depreciation are overwhelmingly more likely than an outright default. Any default, in the unlikely event that it happened, would be a matter of choice and strategic politics, not necessity.
Marc Faber, Jim rogers, Kotlikoff, Moylan, Peter schiff, many reputed persons and millions of people worldwide agree USA is bankrupt. Many of them are economist, financier, or speculator.
Ghost of Cutten, When you include unfunded liabilities, the US has about 50% more debt than the UK as a percentage of GDP. And about the same as Italy as a percentage of GDP. The problem is that the US is about 40 times bigger than Italy. As a previous poster pointed out, US treasury yields do not reflect any type of short term threat, but the US has to rollover much of its current debt in 2012, 2013 and 2014, so these are real danger years. Expect to see a dramatic spike in bond yield's during these years. Think about it, treasuries were always considered a safe haven for nervous investors. As a foreigner, if I had bought treasures in a foreign currency during the last year, I would have got a three percent return, and lost 10% on the devaluation of the US dollar. That's not safe. China, have already stopped buying treasuries for this reason. Eventually there won't be an investor dumb enough to buy all that shit paper. By 2015, the US may not be technically bankrupt, but it will be in a lot worse shape than it is now. It will be third world country bad. Runningbear