“This Is Astounding,” says Josh Marshall, Talking Points Memo:
It is not too much to say that centuries of American prosperity have been undergirded by the “full faith and credit of the United States.” In other words, the US always pays its debts in full and on time. Indeed, it’s black letter text in the US constitution that the country’s debt can never even be questioned. Defaulting on the national debt would clearly be unconstitutional.
That’s the constitution part, which is a weighty matter. But the entire architecture of the global economy and the United States place in it rests on the certainty and basic risklessness of US government debt obligations. It’s as simple as that. (This has actually allowed the US to in effect have people pay the Treasury to hold on to their money since 2008.) Introducing the idea that the US might pay back only a portion of the returns on Treasury bonds would basically disrupt the entire global economy, have massive and traumatic knock-on effects on the US economy and its ability to service its own debt. It would be catastrophic, an entirely self-inflicted wound.