Milstein worked on Argentina's 2005 debt restructuring and Puerto Rico's recent debt default and restructuring, gaining expertise in both emerging-market and US territory sovereign debt crises.

Countries have historically dealt with unsustainable debt in three ways: (1) inflation/currency devaluation (shrinking the real debt burden relative to the economy), (2) negotiated debt restructuring (exchange offers like the Mara Lago accord), or (3) outright default.

Post-crisis reforms, including the Housing and Economic Recovery Act of 2008, created the Federal Housing Finance Agency as a strong regulator with significant supervisory power to constrain the business model Fannie Mae and Freddie Mac can pursue, preventing them from returning to proprietary trading or hedge fund operations.

Terming out debt (extending the maturity from short-term bills to long-term bonds like century bonds) removes refinancing risk and reduces the interest burden of servicing debt over time because a fixed payment schedule is locked in.

Only about 15% of US government debt ($36 trillion outstanding) is held offshore by foreign central banks and foreign private investors, meaning that even a successful exchange offer targeting foreign creditors would affect only a small fraction of total US debt, with the remaining 85% owned domestically by banks, insurance companies, endowments, wealthy individuals, and mutual funds.

The federal budget is structurally composed of entitlements (Social Security, Medicare) and defense, which together account for the vast majority of spending, leaving only about $700 billion of the $6.75 trillion budget for discretionary non-defense spending on education, transportation, housing, and infrastructure.

The US currently marks its gold reserves (Fort Knox) at $42 per ounce when the spot price is north of $3,000, meaning the US is carrying $900 billion of gold at an artificially depressed book value, or roughly 2.5% of the $36 trillion debt.

The credibility of US government debt rests entirely on confidence in the US economy's ability to generate sufficient tax revenue to service the debt; once you go off the gold standard, there is no hard commodity backing, so debt is simply a bet on the future productive capacity and dynamism of the economy.

The US government plays essential economic functions that the private sector will not adequately provide: building infrastructure (roads, airports, railroads), maintaining a healthy and educated workforce, and funding basic research and development in novel technologies where commercial potential is not obvious.

The United States created the semiconductor industry in the 1960s through coordinated federal policy: R&D grants to IBM and AT&T, procurement policies from NASA and the Defense Department to commercialize the technology, which then spawned the calculator, computer, and TV industries.

Forty years ago, the US represented 25% of global manufacturing; today it represents only 15%, while China has risen from essentially zero to 35% of global manufacturing, driven primarily by China's admission to the WTO in the early 2000s and subsequent globalization.

The US has come to rely on importing critical technologies and intermediate inputs in semiconductors and other advanced industries, creating strategic vulnerability particularly because high-end semiconductor manufacturing is concentrated in Taiwan, which is geographically vulnerable to China.

The Tennessee Valley Authority (TVA) is a huge electrical generation and distribution enterprise in Appalachia that is government-owned and could be monetized or privatized to capitalize a sovereign wealth fund.

Fannie Mae and Freddie Mac are approaching their minimum capital requirements (CCT1 levels) and are estimated to be just two years away from reaching fully capitalized status, while stress tests show their losses in severely adverse scenarios would be less than $10 billion.

The Congressional Budget Office estimated that Fannie Mae and Freddie Mac have total equity value (of which the government would own 90%) between $300-$500 billion based on a dividend discount model valuation.

During the 2003-2008 period, Fannie Mae and Freddie Mac operated as 'government-sponsored hedge funds,' expanding their balance sheets by borrowing at near-government rates and investing heavily in subprime and private label mortgage-backed securities to boost earnings, rather than sticking to their core business of securitizing conforming mortgages.

Agency mortgage-backed securities ($7.5 trillion outstanding) are treated as very safe and liquid assets for bank capital purposes because Fannie Mae and Freddie Mac provide an explicit guarantee of prompt payment of principal and interest.

The US never has to pay off its debt; it just has to outgrow it by ensuring that GDP growth exceeds debt growth, which allows the stock of debt to be continuously refinanced and rolled over.

The US federal government has historically worked with foreign sovereigns to address old sovereign debts: after the Cold War, the Russian Federation acknowledged and agreed to pay off Tsarist Russia bonds to gain access to European capital markets, and France/Britain negotiated similar settlements.

Secretary Bessent's agenda of withdrawing government from the economy ('unleashing the private sector') through deregulation and cutting subsidies/procurement policies conflicts with the historical reality that major US industries (semiconductors, computing, aerospace) depended on coordinated government R&D and procurement policies.