[quote=Rich Toscano][quote=urbanrealtor]
If we ever really had a problem paying on those bonds we could just literally print the cash and mail it to the bond holders.
[/quote]

True, but there may (or, I will go so far as to speculate, *will*) come a time when doing that causes serious problems of its own… problems that are not necessarily all that different from actual default.

If they print more, the problems will show up more in the currency market; if they show some restraint at the press then it may show up in the bond market as in Greece. Believe it or not I actually think there is a chance that the folks at the Fed would actually restrain themselves under certain conditions, even if it resulted in a big backup in bond yields.

But that’s probably trying to speculate too many moves ahead. My point is that it could get to the point that printing money to pay back debt is not perceived as all that different from outright default.[/quote]

You have a point with that.
However, at present, we can just print our way out.

That will remain so (at least I believe it will) as long as we are a ginormous consumer market.

If a large slice consumers start getting too broke, we can bring everyone down below our level to supply us. Alternatively, we start supplying more.

That scenario, however, is based on static relative positions in the global economy.

That is unlikely to play out.

It seems more intuitively likely that the US will continue to lose prominence as a global economic power and that at some point (5 years in the IMF’s eyes) we will no longer be too big to fail.

There are other factors at play.

EG: If China sees unrest or catastrophic democratization (which would probably not be a good thing) we could be looking at a very different play out.