I don't think it's this straightforward. When a nation abandons a standard such as the "gold standard," all you have left is its currency and its collateral. Printing more money because we can isn't good, but printing less money won't increase the credit pool. We probably have more collateral than currency, but it's tough to sell a nation these days.
Oh, believe me it's quite simple and straight forward. And actually you already did it multiple times but not on such a big scale. Imagine you have you owe 1,000$ in debts to the foreign investors. You have just 800$ in your pocket. FED prints additional 200$ (you don't even need to print it, you just decrease mandatory reserve ratio at banks and call it e.g. "bank rules adjustment" or "bank management facilitation"
). The economy get the injection of these 200$, you increase taxes to get it in your treasure and then you pay the loan. And that is the end of the story. You have paid your debts, the foreign investors got the blow (even though they have nominal 1000$ back, it's now worth less in real goods) and you just devaluated USD against all other currencies. So as far foreign investors accept being made fools all over again, you don't have any problems. So the real question if the world accept it as if nothing happened or not, and here you are right, that printing more money is a little bit risky for you.
Because if foreign investors don't accept it, then it's the end of the post Breton Woods order. You still will be able to pass this bill on foreign investors, but it will be the last time. Later on they will accept payments only in EUR, JPN, CNY, GBP etc. They can (actually it's the only viable option they have to minimize the blow they would get from you) also try to buy back from US companies real things outside of US for load of USD they still have in their pocket, so it the end it would increase American inflation too.
And outside investment in US debt isn't a simple loan, I don't think. In a global economy, US consumerism matters. Debt funding, I think, is also a bid to gain market share through various mechanisms.
Well kind of...maybe. It works only because foreign countries, keep crediting this consumerism all the time. But recently many countries have realized that the warm fuzzy feeling, which they have while looking at the USD account with so many zeros, is not what it is all about, and they would like to participate in consumption. That's why they buy stakes in real companies, buy more natural resources etc.
The system can work perfectly well without crediting the USA. You get just what you really (in real goods and services) pay for. Of course the world production would decrease at the beginning, but it would decrease only in this fictitious part in which world is crediting you, so it would be problem mainly for US purchase power, and not for the world (speaking in actual goods: the outside world wouldn't be poorer - it would just have less zeros on the account, you are not paying anyway /paying with devaluated USD). So I must say that on this one you depend more on world than world on you.
The problem here is that the only solution anybody has put forth so far amounts to nationalizing bad debt and no assets.
It's not that they haven't found the right solution yet. The problem is that in real goods economy the solution does not exist
. All so called solutions are just proposals on how distribute the bill for years of living on illusions between banks, current and future taxpayers or foreign investors.