[quote=sreeb]
I agree that our situation is not now similar to Zimbabwe although I would argue that it could become similar if we engage in large scale monetization.
[/quote]

Nope. In order for the U.S. situation to become similar to Zimbabwe manufacturing capacity would have to fall by 63%. I feel very confident that debt monetization alone would not cause manufacturing capacity to drop by 63%.

[quote=sreeb]
As for Portugal, Italy, Ireland, Greece, and Spain, it isn’t clear that we are much better off and in some areas we are worse.
[/quote]

The U.S. is better off than all these countries because our debt is denominated in dollars and we own a dollar printing press that will allow us to print money and pay off our debts. Each of the above countries has their debt denominated in a currency which they do not control.

[quote=sreeb]
Even doubling our tax rate wouldn’t completely eliminate the deficit if it actually doubled revenue (which it wouldn’t).
[/quote]

Wrong!

FY2010 U.S. Federal Tax Receipts = $2.1T
FY2010 U.S. Federal Spending = $3.5T

2.1 x 2 = 4.2

[quote=sreeb]
We would have immediate severe problems today if we had to pay the interest rates those countries are currently paying. Interest rates that are similar to those we have historically paid.

Historically, we have paid an average of about 6% on federal debt. At 6% * $15T = $900B in interest alone. The average maturity of federal debt is ~4 years. If interest rates went above 6% we would be completely screwed.
[/quote]

Ahhh, yes, the problem of the invisible bond vigilantes. The Federal Reserve has already shown that they can lower interest rates by buying Treasury bills. Problem solved.