To do what you are saying would signal to world equity markets...

To do what you are saying would signal to world equity markets that the USA is no longer an advocate of the free trade regime, and not a fair player.
With the US imposing irresponsible steel tarrifs and embarking on a massive farm subsidy program they have already condemned themselves in world opinion.


Those foreigners that had debts outstanding in USD would only receive 1/3, 1/5, or even 1/10 of the expected amount in their home currency, due to the massive depreciation in the value of the USD under your 'printing press' idea..
Thanks for giving me credit for the idea, but don't nominate me for the nobel prize for economics. Expansionary monetary policy & budget deficits are the textbook solutions to deflationary recessions. I doubt if the losses by investors would be as great as you forecast. If the US were experiencing such a severe recession the rest of the world would be in a coma. The currencies against which the US$ is measured would also be weak.


Where would the USA source future funding to drive growth in future years?... and what would the cost of imports be??
The trouble with hypothetical scenarios is that they become more meaningless the further into time you peer. You are forecasting a US deflationary recession, I took the hypothetical scenario a step further by suggesting a US countermeasure - increasing the money supply. Your question is asking about the impact on funding future US imports as a potential consequence of a potential policy to a potential recession, none of which have happened! Lets pick up the debate when reality catches up to our forecasts.

you know how much pysical currency they'd have to print to cover the existing foreign debts?
US net foreign debt is $US2.8 trillion, @ 6% interest pa thats interest of $US0.16trillion pa. Total US currency in circulation is $US0.575t. So it would require a 28% pa increase in physical cash to cover the interest on foreign debt. In reality they can increase the money supply without resorting to the printing press. This is only a figure of speech.

How much times greater is this than the current physical currency? 3x, 5x??
28%, but there are easier ways of increasing the money supply.


... controlling mass inflation in such a situation would be an impossibility - what you'd have is a total missallocation in all financial markets- bonds, property, equities.
The US government has already shown that the well being of the rest of the world counts for nothing compared to US domestic interests. If the US is faced with a deflationary recession which cannot be cured through interest rates, due to the 0% fed rate floor as your original message predicts, or through expansionary fiscal policy, due to the impossibility of financing the growing budget deficit, then they will debase the currency and screw the foreign bankers. This is not a novel solution. The British did the same thing in the 19th century, the South did it during the civil war and you can trace a similar history all the way back to the greek city states. When all hell brakes lose, look after your own people first.



You state:

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.



Response:

What about the conservative American investor who has his $500,000 retirement savings in a bank deposit account??

Doesn't he suddenly witness the buying power of his savings evaporate?

It that palatable?