A fail safe for a debt default.

[speak easy]

As at September 22, the Federal Reserve held $5.314 trillion of U.S. Treasuries.
https://fred.stlouisfed.org/series/TREAST

If necessary, the Board of Governors could cancel sufficient of its holdings as to stave off a default.

[unblock]

1. not sure that works, technically.

this doesn't raise cash the way minting a trillion dollar coin would.

it would certainly lower overall debt, but the problem is all about cash flow.

the problem is making payments, such as interest on treasuries. you'd have to cancel massive amounts of treasuries to lower interest by only a little. at 2% annual, a quarterly interest payment on $4 trillion dollars is "only" $20 billion.

so, ok, it could help a little, not sure how much time that $20 billion buys.


but the coin-minting idea is certainly a more direct solution.