Paul Krugman can keep arguing that debt doesn't matter, but I'll stick to real world economics and keep an eye on US debt lest this happen to me.
It's a bit different. This would never happen in the US in my opinion.
Oh how wrong you are! It's already happened in the US more than once.
As a matter of fact, some think that the reason John Wilkes Booth shouted "Sic Semper Tyrannis!" (Thus Always To Tyrants!) right before he shot President Lincoln is because of Lincoln's issuance of the original "greenback" (unbacked by gold or anything other than "full faith and credit") that was used to pay the Union Soldiers during the US Civil War. Try finding and spending one of those greenbacks today and see if you can get it accepted.
Another interesting factoid is, during one of the budget crises back when Timothy Geithner was still head of Treasury a few years back the federal government dipped into the federal employees' retirement system as a way to temporarily solve the crisis at hand at the time. In other words, they temporarily stole the money from the very employees who were working right alongside them and for them rather than outsiders in order to balance the system . . . claiming to have put it back at some later date. But even if they did put it back, the very fact that they would take it in the first place implies at the very least a "Cyprus/EU" mentality when it comes to funds on deposit. Granted, it was ONLY (ha! ha!) federal employee retirement money and not everybody's money at all the banks, but still . . . it was a money-grab from a group of people powerless to stop it just the same.
Another thing. There was a movement in the US to withdraw money from the so-called "too big to fail" banks by a certain November 5th (Guy Fawkes Day) as a protest against the bailouts sometime back. There is video footage on Youtube of people being turned away from their local Bank of America branch by police officers even though they had CDs and other proof they were customers. The banks simply refused to allow the customers to enter the bank to make the withdrawals and account closures under threat of being arrested as an effort to keep the collapse from happening. There was a guy who originally stated that this action should be done based on what he called "Tank a Bank" as part of a political movement. Congresscritters called him a financial terrorist because, unlike the B of A plan above, people were originally not supposed to just move the money to a credit union, but to take it home to remove it from the banking system completely.
Bottom line here is this.
These people will do whatever they think is necessary in order to keep the party going for as long as they possibly can, up to and including killing people whenever it suits them. (Rumor is the reason for the attack on Iraq is because Saddam had demanded to be paid in Euros or gold for his oil instead of US dollars back before Desert Storm 1.0)
