Why can't the Federal Government declare bankruptcy and apply for a Chapter 13?

The U.S doesn’t need to reorganize it’s debts. Besides, since it can create money, it can pay its debts. And it can raise revenue if it had the political will to do so.

If the U.S decided to declare bankruptcy, the world economy would completely collapse, since fiat money would no longer be accepted anywhere. We’d be reduced to a barter system.

Don’t say we’d go to a gold or silver system; that requires a functioning government. There is not enough gold in the world to run our economy. Without fiat money, people would try to barter with gold, but the value would not be consistent.

I believe it’s a Chapter 9 for government entities and it usually doesn’t repay all debts. An attorney quoted me most bankruptcy plans end up paying 6 cents for every dollar owed. The dollar is supposed the most stable currency, so pulling the rug out from it would destabilize the rest of the world and throw all of the world into chaos. I don’t think we can even begin to fathom what would happen.

To declare bankruptcy, one must provide evidence that one cannot pay one’s debts. However, we CAN pay our debts; we simply choose to consider not doing so for political reasons.

If a guy making a seven-figure income decided one day to quit his job, become a greeter at WalMart and declare bankruptcy to get out of the rest of his debt, that wouldn’t fly. Nor should it fly when a nation, choosing not to increase revenue or even, as a last resort, monetize the debt, decides bankruptcy is the better option.

It’s funny, too, when I see all the “why don’t we just decide to default and not pay our debts?” arguments coming from the Right, which is (supposedly) the more moral, traditional party. Old fashioned conservatism would say that paying the debt is the only conceivable option, and that default is beyond the pale. Who spends and spends “other people’s money” profligately without “getting a job to make money” and then decides to stiff the bill? In public opinion, it’s those crazy liberals, but now it’s the liberals who want to pay the debt down and the conservatives who say no new revenue (who don’t want to “get a job”). We live in interesting times.