[Mariner]

"may want to consider that such an action could well guarantee hyperinflation, once the Fed is stuck as being the only buyer of US debt."

I believe this shows shortsightedness on the part of the author.

With China...potentially Japan and the Saudi's, or ever worldwide dumping of US Treasuries and dollars interest rates will go through the roof.

Easily 10-12% within a year. Maybe even higher.

Can you see the US Taxpayer paying $1trillion per year in interest? $1.5 trillion?

Me neither. It will never happen. The USA will default. Outright, via declaration.

Yes, the country MAY announce they will honor debt held privately by US Citizens but it won't matter.

Sovereign Default always completely destroys the value of the sovereign currency and always results in regime change.

The USA under it's current Constitution may cease to exist over the next 5-15 years.

[RKBA Democrat]

“Can you see the US Taxpayer paying $1trillion per year in interest? $1.5 trillion? Me neither. It will never happen. The USA will default. Outright, via declaration.”

Yup. The real question now is whether default comes on our terms or not.

[BenKenobi]

It won’t happen because of who it would hurt. It would hurt the folks who are trying through QE to try to save themselves.

Who does QE hurt? Everyone who has income, or is at the stage of their life where they are trying to earn more.

Who does QE help? The folks who already have theirs and are trying to protect theirs. Default would mean destroying the bond holdings of the biggest owners, which are the unions.

This government would sooner hit 15 percent inflation than default.

[pierrem15]

Treasuries should have gone through the roof already: they haven't because Bernanke steps in and prints dollars to buy US debt offerings to keep interest rates low.

This is what is causing such consternation abroad-- large US debt holders are effectively being shafted by a low rate of return and an effective currency devaluation by the Fed.

It's a Mexican standoff between the US and China, and the more likely result is a moderate but inexorable decline in the dollar. If at some point there is a sufficient amount of another currency in international circulation, the dollar may lose its reserve status, but that is unlikely as the other major currencies all play a mercantilist game that restricts the availability of the Euro or Yuan or Yen to be used as a reserve currency by others.

Any sudden change could prove catastrophic for China or Germany as their currencies rise to the point that exports are choked off.

I suspect the Chinese will push development of their internal markets as well as a 'Yuan Zone' of dependent commodity producing states in Africa and elsewhere to guarantee commodity imports and a limited export market.

If enough dollar holders decide to dump dollars into hard assets like commodities, then the US is screwed because we cannot afford to pay for the imports, and our deranged ruling class here will not allow the exploitation of our natural resources.

The only real answer is the removal-- root and branch-- of the current political establishment and a re-ordering of Federal priorities and expenditures.