From my basic understanding, this is indeed true. At the cost of rampant inflation, the US can simply print more currency, inflate away historical debts, and not have to default.
If the Moody's credit rating is a measure of the stability of the asset, then a downgrade makes sense. If its to measure the likelihood of a default -- it does seem unlikely the US would simply default.
What you are missing is fairly straightforward. Inflating away debt is a form of default. People don't want to lend you money when that is how you plan to pay it back -- same outcome as a default. I guess you could do it once but only if you plan to not borrow again.
Then you see the collapse of the global economic system as credit crashes and nobody can effectively transact business.
If you cant trust a currency, you have to revert to much more cumbersome and limiting contracts. e.g. loaning cash today to be repaid in gold tomorrow.
Furthermore, the undesirability of a currency severely limits the ability of governments to maintain economic stability.
It's true. Maybe, the consequences of doing so are so drastic and would ripple throughout the globe such that getting pennies on the dollar for debt obligations may be a more attractive approach but still a loss for creditors?
From my basic understanding, this is indeed true. At the cost of rampant inflation, the US can simply print more currency, inflate away historical debts, and not have to default.
If the Moody's credit rating is a measure of the stability of the asset, then a downgrade makes sense. If its to measure the likelihood of a default -- it does seem unlikely the US would simply default.
But maybe there's something I'm missing