“Bankruptcies of governments have, on the whole, done less harm to mankind than their ability to raise loans.”

If they turn us down for loans, the Fed will just print more money.

The knee-jerk reactions of governments going bankrupt are so severe because it is an affect of the people's religion failing them. The people can not continue in governmental larceny, socialist implementations, and other (im)moral / religious dogmas while, as gods making laws, the natural law (including fiscal law) raises its head to ultimately reign supreme. Government borrowing debt (frns or the like) will always end in prosperity lost for We The People and government bankruptcy.

We must let the banks and fat corporations fail, then the new and innovative can meet the demand. As long as the state protects all the racketeering and monopolies that thrive on government subsidy and contracts, prices will rise and production will move to other countries. The free market will solve all.