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History is littered with examples of major economic and financial crises in countries that have engaged in public spending profligacy. That sad experience should be raising red flags in the United States, where the unsustainable trajectory of U.S. public finances is now suggesting the real risk of either a destructive burst of inflation or an outright government debt default. In a new paper, AEI's Desmond Lachman considers what history might teach us about sovereign debt defaults, what special features characterize the present U.S. public finance outlook, and what the endgame might be for a country with unsustainable public finances.

Also of interest:

• In a related AEI working paper, Lachman, Kevin A.  Hassett, and Aparna Mathur discuss the three divergent paths upon which countries with high deficits have historically proceeded. They find that the most successful policy responses to high deficits have generally reduced spending.