How a Rich Nation Becomes a Poor Nation

Whenever Congress has its predictable little spats over raising the debt ceiling so it can avoid triggering yet another government shutdown, some members raise the disquieting prospect of “default.” Defaulting on the national debt, however, is an idle concern. That’s because there’s enough tax revenue coming in to pay the interest on the federal government’s debt as well as all its other legal liabilities. Also, there’s never been a problem in rolling over maturing debt and in selling more new debt. And our sovereign debt is backed up by the “full faith and credit” of the United States. Some wags might even say that, if need be, we can always just “print” new money (out of “thin air,” as they say).  Besides, the dollar is the world’s “reserve currency.” Given all that, is there any scenario in which America would default on her debt? If the possibility of America defaulting on her...(Read Full Article)