That would cause a mass exodus of capital from the USA... and a total lack of foreign capital to fund existing debt.
This is the scenario. The US is in a deflationary 1930s style recession. The govt announces an inflation target of 3% and says it will increase the money supply until this target is reached (incidently this is the policy that most economists advocate for Japan, which refuses to listen). The US currency would fall and US treasuries plummet in value due to this debasing of the currency. US equities would rally due to the benefits of low currency and increased economic activity. There is no issue with 'funding existing debt'. The foreign holders of the debt have already lost a lot of money and can only sell it to each other at discounted prices. The reluctance of foreigners to buy new treasuries would be offset by the increased attractiveness of equities.
Your scenario of them placing the printing presses in overdrive would transfer wealth from savers to the borrowers at an unprecedented rate, and thus be absolutely unpalatable politically- yet it certainly remains a possibility. Politically this would be a winner. It would create jobs, get the growth engine going and transfer wealth from foreign debt holders to US borrowers. Most households have fixed rate mortgages so they would love it because it would devalue their debt in real terms. This would be an easy sell. The US is in a very enviable position in having its foreign debt in its own currency. This gives it options that would not be available to Australia in a similar crisis.
