One Hundred Nineteen: US Debt Default

What's the difference between the US defaulting on its obligations now, or later? Default is coming is some form or fashion. Just like consumer borrowing in the run up to the 2008 recession, a reckoning on US government debt is also a certainty. Prior to the recent recession, US households borrowed against assets rising in price to support spending that exceeded household income. Ultimately, the asset prices became untenable, borrowing was impossible, and the bubble burst. Likewise, the US government is borrowing to support spending which exceeds income (tax revenue and other forms of government income, such as fees on everything under the sun). At some point, the ability of the taxpayer to cough up the giant sums necessary to both pay for government spending as well as paying for debt service will be exhausted. This will probably occur simultaneously with the diminished attraction of lenders to US debt, which will drive up the cost of US debt and fuel the spiral of economic pressure on the US taxpayer. This is inevitable. The only question is how to position oneself for this situation. Will cash be worth anything? Will it be better to be fully leveraged, or debt free? My guess is that the ability of lenders to collect on outstanding debt will severely curtailed, and will make the current mortgage foreclosure disaster look tame.