I agree the Feds will step in where States are concerned, however if steps are not taken to cut costs – that means giant cuts in K-12, prisons and the elimination of at least 1/3 of state and municipal administrative staff, along with a substantial reduction in promised retirement benefits, it will only delay a bigger inevitable.

Governments tend to grant larger retirements in lieu of salaries as a form of borrowing. With the advent of extreme deflation, these expectations will also need to be adjusted, or the money printed and all that follows…

I just cannot see any politician making these tough decisions, so my guess the decisions will be made for them (US).