If a private debtor defaults and declares bankruptcy, then the money supply contracts and you get deflationary pressure. I'm curious, though, why you believe the US would see deflation if it were to default?
The Eurozone countries tended to deflate, but there are plenty of examples of countries that went the other way -- Germany, Argentina, Mexico...
I don't think the US will default any time soon, but if we were to get near that point, we would inflate our way out.
The Eurozone countries tended to deflate, but there are plenty of examples of countries that went the other way -- Germany, Argentina, Mexico...
I don't think the US will default any time soon, but if we were to get near that point, we would inflate our way out.