It appears that there are many assumptions going on here, and to be honest I'm not certain exactly what the consequences of a default would be, but some posts here assume that a Government default is the same as the US Dollar collapsing.
These are two very different events, with very different ramifications.
The US Government defaulting would most likely cause as huge decrease in value of the US Dollar, but that in itself is not a complete collapse of the currency. The default would cause interest rates on the US Debt to increase, probably to the point where the US would not be able to pay all its debts which would eventually result in a collapse of the dollar, since the Federal Reserve would simply print more and more currency. (they are already doing that at the rate of $800 Billion a month).
The US Dollar collapsing completely is a far more significant situation, with far reaching ramifications. If you've followed other country's currency collapse, typically they issue a new currency, with some buy back of the old currency at some % of value towards the new currency. The problem is that the US Dollar is the world trade currency, and most other FIAT currencies are valued off the US Dollar. So this would be a world affecting event, extremely bad for all countries involved. (I am certain that the world banking organization, WBO, already has plans in place for handling this situation, and I guarantee bitcoin isn't going to be part of that plan).
I believe that something like BTC, which is not controlled by any government is eventually the proper way to go. But there isn't currently, and never will be, nearly enough BTC in circulation. Not to mention that making BTC valid currency for world trade would make a lot of ppl on here insanely wealthy, which the WBO will not allow.
The cash increases at a rate of about 7 billion USD per month currently, credit created at Fed about 85 billion per month. Existing cash is 1200 billion USD, existing credit (M2) 10000 billion USD.
From random website
http://www.data360.org/graph_group.aspx?Graph_Group_Id=1315Cash inflation 7*12/1200 * 100 = 7%
Credit inflation 85*12/10000 * 100 = about 10.2 % (This number can not be accurately defined).
I agree that when credit expansion start to fail, printing (M0 ) will start to increase limited only by the capacity of the literal printing presses. So price reductions over all when the credit is rejected due to risk, price increases restored after literal printing has been going on for some time, then after price inertia is exhausted, excessive price hikes. It's at least a possibility, but we also have unpredictable politicians.
