Your Point 1. There are vast sums of protection sold on US Treasuries in the derivatives market. The US and European banks have sold the protection in the form of Sovereign Default Swaps. Simply telling holders of treasuries that they now have a term deposit or any other security or account in exchange for treasuries squarely falls within the definition of a Default under these derivatives. Banks have sold this protection to earn the carry, believing a Default can never happen. Institutions have bought the protection because it is a tail risk they they believe would devastate the value of their treasury holdings if it did happen. A conversion like this would require huge pay outs, placing private banks on the hook. So the concept of government debt can disappear, but not before a US Default and a banking crisis.
Your Point 2. Lets imagine we get through this somehow (probably more money printing to make the banks whole). The US is the Reserve Currency because there is trust in the Dollar. It was the gold backing that originally allowed the US to become the Reserve currency. After that ended it was the promise to make available the currency of the biggest economy for commerce, to lend and to pay back. There was no better alternative because if you have a fiat currency without a gold backing the best one to have is one with the biggest GDP (because it can raise the most taxes ). This is what allowed the US to remain the reserve currency after the gold standard ended. If the US sets up a system that allows it to repay its debts because it can print rather than because of its wealth and production capacity(GDP) its status as a reserve currency will not remain for long. It's already a problem.
Your Point 3.
As you allude to interest rates are made up of two components the risk free cost of capital (which you say will be zero) and the credit risk of your counterparty. You don't believe that printing money will cause inflation so you must believe that politicians will be quite restrained so that there is never too much money chasing too few goods. In this case the risk free cost of capital is zero because things will cost the same in 10 years as they do today. I think we just disagree on how politicians will behave.
Your point 4.
I'm just saying that the payments from printed money will still blow up bubbles. We are already seeing it when the printing does have some limits on it.
Your Point 2. Lets imagine we get through this somehow (probably more money printing to make the banks whole). The US is the Reserve Currency because there is trust in the Dollar. It was the gold backing that originally allowed the US to become the Reserve currency. After that ended it was the promise to make available the currency of the biggest economy for commerce, to lend and to pay back. There was no better alternative because if you have a fiat currency without a gold backing the best one to have is one with the biggest GDP (because it can raise the most taxes ). This is what allowed the US to remain the reserve currency after the gold standard ended. If the US sets up a system that allows it to repay its debts because it can print rather than because of its wealth and production capacity(GDP) its status as a reserve currency will not remain for long. It's already a problem.
Your Point 3.
As you allude to interest rates are made up of two components the risk free cost of capital (which you say will be zero) and the credit risk of your counterparty. You don't believe that printing money will cause inflation so you must believe that politicians will be quite restrained so that there is never too much money chasing too few goods. In this case the risk free cost of capital is zero because things will cost the same in 10 years as they do today. I think we just disagree on how politicians will behave.
Your point 4.
I'm just saying that the payments from printed money will still blow up bubbles. We are already seeing it when the printing does have some limits on it.
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