http://4.bp.blogspot.com/_FM71j6-VkNE/Sh6XqKgPTvI/AAAAAAAAC44/1yHc1ROfJVo/s1600-h/bond+matrix.png

true, there may be little doubt that the US gov will pay coupon and all necessary payments – but the factor u mentioned above does come into play n increasingly the us gov is expected to “take care” of this pesky side problem

Whatever the reserve currency, the dollar will become cheaper relative to China Russia and India’s currencies unless they accumulate large quantity of it, which is what they are trying to avoid.
This simply doesn’t depend on what you call the “reserve currency”.
You can’t at the same time profit of a system and complain about the very mechanisms that make this system work.
You can’t have it both ways.

here is USA modifying cap & trade program that will suck up more revenue. free up revenue, you said? HAHAHAHA, HEHE HAHA.

“But Sovereign debt, in large chunks, is always in default when you look at global data over a period of time. Don’t take my word for it. Read Dr. Kenneth Rogoff’s detailed data analysis of sovereign debt default.”

Where is the Rogoff material? I’v seen quite a bit of Rogoff writing about sovereign debt problems, but never on the US. He has, not so long ago repeated thre three options available to a government in financial distress. But that did not suggest in my view that he would consider a US debt default remotely feasible. In general, countries have four options to deal with excessive debt: default, inflation repudiation and targeted taxation (or confiscation). Governments borrowing in a foreign country will generally blackmail creditors by threatening default, in order to get rescheduling or relief. Countries borrowing in their own currency with mainly domestic creditors (like the US for its long term paper) typically monetize first and may ultimately move towards targeted taxation or involuntary swaps. Default is highly unlikely (and a country like the US has many easier options like modifying social programs which would free up revenue for debt repayment). The interesting thing is when a country has borrowed in its own currency and has mainly foreign creditors. Such a country can do a short burst of hyperinflation (with associated external depreciation) and then offer to buy the debt back in installments.

I guess that there are plenty of reasons (especially for foreign investors not to buy long term US treasury paper, but default would be at the bottom of my list, because the US gvt has better tools to take advantage of your generosity.

Railway Transportation of Cargo across the United States is at DEPRESSION levels. (Year on Year Statistics).

Only Bernanke keeps repeating the tired mantra of “green shoots”. The green shoots are yellow weeds!

Auto Shipments Down 51%
Metals Shipment Down 52%
Intermodal Shipment Down 21%
Lumber Shipments Down 35%
Chemical shipments Down 21%

http://globaleconomicanalysis.blogspot.com/2009/07/railfax-rail-carloading-report-june-27.html

“The major part of Indian reserves are in dollars — that is something that’s a problem for us,”

“your currency is likely to become my problem,

http://www.bloomberg.com/apps/news?pid=20601091&sid=aSx4wlTQzexM

Your 8:13 AM post is the best comment I have ever seen you make (excluding #8, for which there is no depression-related historical evidence in the U.S.).

FG: Good question. Why are the Chinese authorities punishing their own population by forcing them to invest their savings in a currency that is losing its value (according to you)? If they cared about the Chinese population they would raise their purchasing power by letting the currency rise.