"Why Default on U.S. Treasuries is Likely"

That's the sobering title of a new paper by San Jose State Associate Economics Professor Jeffrey Rogers Hummel, published at the Library of Economics and Liberty. The summary of Hummel's thinking about the unthinkable:

Almost everyone is aware that federal government spending in the United States is scheduled to skyrocket, primarily because of Social Security, Medicare, and Medicaid. Recent "stimulus" packages have accelerated the process. Only the naively optimistic actually believe that politicians will fully resolve this looming fiscal crisis with some judicious combination of tax hikes and program cuts. Many predict that, instead, the government will inflate its way out of this future bind, using Federal Reserve monetary expansion to fill the shortfall between outlays and receipts. But I believe, in contrast, that it is far more likely that the United States will be driven to an outright default on Treasury securities, openly reneging on the interest due on its formal debt and probably repudiating part of the principal.

Whole thing here. Hummel wrote about "The Fed's Binge" for Reason in January, and is contributing to an inflation forum in the forthcoming October issue.