As you probably recognize I could say quite a bit on this.
First to understand, is that if the U.S. defaults on its debt it will be by choice. Debt service of @$20b per month with revenues of @$200b per month make it clear that the U.S. can, if it wants to, pay its debt.
The issue is that the U.S. spends @40% more than it takes in. Currently the U.S. is spending @25% of GDP, which is much higher then historically has been shown to be viable. Many studies will show that a government can only effective take in @18% of GDP in taxes before the economy suffers and tax payers change behavior to lower their tax load.
So, the U.S. has a big *spending* problem. Even the watchdogs have stated that simply increasing the debt ceiling is not nearly enough. Raising the debt ceiling is what the standard DC politicians want, but doing so will still result in bigger problems, unless spending is cut.
Basically the U.S. can exercise some fiscal responsibility now, or it will have to in the long run, when there are no buyers of U.S. debt, so funding of all the entitlements has to end. Initially the U.S. is likely to do what other countries have done, simply print money, but invariably that will result in hyper inflation.
There are no easy answers, and most of our federal politicians think they can deceive their way through this, as they have done for so long. In the end there will be a massive correction if not severe spending cuts are not taken now.
Hard assets, and perhaps Canadian dollars are a good idea for insurance.
