The key point I am trying to make is that it is impossible for the US government to default on their Public debt when that debt is nominated in a currency that they can print. They may further devalue their currency but thats a different story. I am not denying consequences of further QE just refuting the notion that the US could default on debt payments.
I was trying to make a clear distinction between the US for example and the PIGS who found themselves in a much more precarious position ie interest payments on burgeoning debt nominated in a currency that is controlled by the ECB. A very different situation don't you think?
I maintain my position that the chance of the US defaulting on public debt is about as likely as the world ending under a cataclyismic event in December 2012 (as magically foreseen by the Mayans).
There is a plethora of countries who have higher levels of public debt as a % of GDP than the US, hence why demand for US treasury bills remains strong.
The key metric is public debt as a % of GDP some cursory reading will show that the US had a higher level in the 1950's than it does today.
What the US and in fact the majority of western countries now need is a heathly extended dose of inflation. Governments ultimate solution to debt is to reduce it with inflated tax revenue.
GDO Price at posting:
29.0¢ Sentiment: None Disclosure: Not Held