What would happen if the US defaults on its debt? As has been widely discussed already, the situation in Greece is considered more serious than in the US, as they have dollar-denominated debt and can only print Greek currency. The US, has the benefit of World Reserve Currency status. All of that does make sense, but I'm thinking there might be more to the story. So I would like to invite speculation on the consequences if the US one day defaulted on its debt.

A country going bankrupt is hardly a novel event, but few countries of the wealth and influence of the US are can be found in historical precedent. One of the only examples that came to mind is when Russia defaulted in 1998. That had global repercussions to North and South America and beyond. Also it destroyed the business model of Long Term Capital Management, an investment fund headed by a team of nobel-prize winning economists and mathematicians. 

World Reserve Currency aside, is the Russian default a fair comparison? What different things might we expect if it were the US to default in the coming years?
The Russian default was an extraordinarily insignificant event compared with a current-day US default on all treasury securities.  There are no remotely similar events to compare it to.  This makes it hard to make guesses about all the ramifications.  Still, speculating is fun.

My guesses, based on a complete default (no money recovered) on all treasury securities:


Massive failure of important financial institutions all across the world.  LTCM was a hedge fund: a type of institution the is specifically expected to have significant failure risk.  On the other hand, treasury securities are held by institutions that are not well-equipped to bear risk.  Pension funds, banks, central banks, possibly whole governments would immediately fail.  There would be ripple effects as other institutions linked to them (or who they owe money to) faced an uncertain future.
Total freezing of most important financial transactions and many markets.  Treasury securities are used as currency and margin in many large and important financial transactions.  We witnessed a great deal of hobbling of financial institutions and markets when a few CDS's and mortgage-backed securities failed.  The loss of confidence in financial institutions and markets would be incomparably greater.
Drastic increases in all interest rates and a sharp decline in all stock prices.  The Russian default had consequences because it caused investors to dump risky investments in favor of safe ones.  A failure of the safest investment (treasuries) would cause utter loss of confidence in all investments and investors wouldn't know where to put money.  Cash maybe?  They would pull money out of both safe and risky investments, driving down both stock and bond prices. 
Widespread unemployment. Cash available for lending would dry up.  Firms would be unable to borrow and have to forgo projects and lay people off.  These people would reduce their spending and default on some loans, causing amplified effects on interest rates and economic activity.  I would not be surprised if starvation and loss of social order ensued.  
Irreparable harm to confidence in the US government.  The government would never again be able to borrow at low rates, it may not be able to borrow to fund its usual deficit.  This would be problematic since the depression and economic turmoil would require expanding the deficit.  It would be my guess that the US government as we know it would not continue.


I know this sounds a little alarmist, but wholesale default on all US government debt is truly an end-of-the-world-as-we-know-it scale event.    The world truly would change dramatically. Probably future generations would read about the golden age of humanity that ended with the great default.

Realistically, the US is not going to completely default on its debt any time soon.  If there was even a bit of worry about it, people and institutions would stop using it as such a critical component of their transactions and saving.  This would also be a dramatic change, but it would happen over time and reduce the effects, should a default ever happen.  I'm not sure what people would use as a substitute.  It would be uncharted territory.

A more likely, but still apocalyptic, scenario would be some partial default or sustained high inflation.  See the above consequences, but scaled down and including loss of confidence in the dollar.