partypup, a default occurs when the person who is supposed to pay does not pay, not when the person who is owed refuses to accept the payments.
If receiving future dollars becomes less interesting as a reward for exporting real goods and services to the US, then either the value of the dollar will fall, or interest rates on dollar debt will rise. If the US govt is committed to manipulating interest rates down (as they clearly are) then the outcome will be a drop in the value of the dollar. If a 20% reduction is not enough to entice foreigners to sell us stuff on credit, then it will go to 30%, and if that is not enough…
Eventually, the dollar will reach a value that satisfies our foreign trade parties. It’s not going to be zero. I just don’t see why a large devaluation has to go all the way to zero. This is not how these things work historically. The US has problems, but it does have good infrastructure, food and water supply, open space, and other basics of a good modern life. At some point that puts a floor under the value of US assets and even the dollar.
