defaulting on debt is not the only way to scare investors from Marketplace.

I'm Sabree Beneshore in for David Brancaccio.

As the tax and spending bill continues to wind its way through Congress, questions about the U.S. debt have not gone away.

Over the weekend, Treasury Secretary Scott Besson said the U.S. would never default on

its debt. But the U.S. doesn't have to actually default in order to lose the confidence of investors,

who would, by the way, in turn, charge the U.S. more to borrow. Julia Cornado is founder of

macro policy perspectives and a professor at the University of Texas, Austin. It's true that the U.S. can always pay the Treasury debt that it owes.

It has a printing press. It can create money.

The question really is around what will the value of those dollars be when you get them back?

There's really no fiscal discipline, no end in sight to large and rising

deficits that the U.S. is running. And there's also a lot of sort of breakdown in rule of law

and transparency and just the rising risk of the U.S. as a counterparty. So they're doing things like

threatening to tax treasury interest,

which is a form of default. It's a form of saying, I'm not going to give you back what you

expected to get back when you bought this treasury security. If the U.S. were to just print money

to pay its debts, what's the problem with that? Well, if you do too much

of that, that can become inflationary. And you also run the risk of losing the confidence of people

who buy treasury securities and they may choose to sell them. And that would put upward pressure

on bond yields and downward pressure on your currency. So you could just lose the confidence

that people have in holding dollars. So it's a very risky strategy. It's a temptation that many

governments have succumbed to.

Sometimes we do that effectively during crises.

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