It's apples and oranges. When your debts are denominated in something you issue, your problems are inflation and unemployment; when it's not something you issue, your problem is solvency.
The US problem is worse than Detroit's, because Detroit can escape via bankruptcy and the US can't. Fixing the debt by printing money and the resulting inflation and unemployment would be far more disruptive to the US than the bankruptcy process will be to Detroit.
> The US problem is worse than Detroit's, because Detroit can escape via bankruptcy and the US can't.
"Bankruptcy" is just the sovereign conditionally permitting a debtor to repudiate (some or all of) its existing debt, and is only relevant because, in the absence of bankruptcy, the sovereign would instead be enforcing the existing debts.
As a sovereign state, the US doesn't need bankruptcy; if it chooses to repudiate its debt, it just does so, it doesn't need to ask a higher sovereign for permission or terms (it might choose to negotiate with other creditors to maintain good relations, but that's something any debtor can do short of bankruptcy.)
I agree with you in general, and completely disagree with the guy you're replying to, who doesn't know what he's talking about.
However, it's worth pointing out that the idea of national-level bankruptcy isn't _entirely_ meaningless. The other thing the bankruptcy process does is provide an orderly means of distributing what funds are available amongst creditors, directed by a theoretically neutral third party.
There is sometimes discussion of creating an inter-national (ie, between nations) bankruptcy process, to make defaulting on national debt a more orderly (and, at least in rhetoric, a more fair and just) process.
They haven't gone anywhere for a variety of reasons, and even in proposal it would have to be a pretty different process from ordinary bankruptcy, because indeed sovereign entities are so different in their relationship to debt and financial equity than non-sovereign entities as you note.
(And possibly because the idea of the _liquidation_ of a nation state has rather terrifying implications for democracy, but I don't think that actually puts much pause in the those who run things.)
(And, then, as you mention, there's the fact that the US's debt is in it's own currency; AND most of our creditor's debts are in _our_ currency too. Which puts the U.S. in a unique class of it's own, even among sovereigns. And generally, means nobody anywhere actually wants the U.S. to 'pay its debt'.)
A refusal of any considerable scale by the US to repay its foreign debt obligations would probably be considered an act of war. Things would have to be very, very bad for things to go that far. More likely you'd see dollar devaluation and heavy inflation, but even that would be a global political problem.
> A refusal of any considerable scale by the US to repay its foreign debt obligations would probably be considered an act of war.
Default has rarely been considered an act of war except when the default was on debts incurred as part of a peace settlement, and its not like anyone is in a position to take much substantive action because they "consider" a US act to be an act of war.
> Things would have to be very, very bad for things to go that far.
Well, its not going to happen in practice in any case, because the US debt is dollar denominated, and if it was necessary, it could be monetized (not that it would have to be: creditors would probably prefer to allow the US to restructure debt rather than encouraging monetizing it, since many other debts are dollar denominated, and for most creditors it would be better for the US debt to be devalued through restructuring than for all USD-denominated debts to be devalued by monetization.) Sovereign default is mostly an issue with countries whose debts are denominated in something other than their own national fiat currency.
Tell that to Japan. They have a debt to gdp ratio well north of 200% and they still are fighting deflation. BTW, their interest rate is 0. Those bond vigilantes are tough.
The US needs to run larger deficits until we are at full employment. A simple way to do that is to eliminate the payroll tax both on employer and employee side. This will stimulate demand, and demand is the name of the game in this era of high productivity.
>"because Detroit can escape via bankruptcy and the US can't"
What does "escape" mean in this context? Bankruptcy means that bondholders and other investors get stiffed. That's a rather one-sided view of the outcome, and will itself have economic consequences beyond The City of Detroit.
There is no "escape". Bankruptcy, while necessary, picks the wrong winners.
Why does money printing cause more unemployment? I don't see the link?
EDIT: I guess a good debt destroying hyperinflation would root out all the FIRE jobs and cause unemployment there. A high inflation would funnel more wages into debt payoff so think I can see the link.
