It's not stupid at all- governments with enormous, unpayable debt have two options- inflation or default. The US can't default without destroying the world economic system, so we'll just undergo obscene levels of inflation until the debt is relatively small enough, relative to other currencies, that the rest of the world can organize a bailout.

Which would be all fine and dandy until we look at past history of such maneuvers and find that no government has ever done this and survived. A good example of a government inflating currency to repay debt would be post-WW1, pre-Hitler Germany.

Furthermore, there aren't just two options for huge unpayable debt. First of, even a debt of $14 trillion is not enormous and unpayable for the US gov. (though with a few decades of medicare, medicaid, and social security benifits, it will be).

Furthermore, here the US gov. has a choice to reduce tax payer liability which is what makes the idea of explicit backing for Fannie Mae and friends particularly stupid. If done carefully, these monsters can be slowly unwound and the ticking fuse they represent, diffused. Even if they were to implode in the middle of this process, I would like to argue that the longterm benefits of removing these companies and not adding $5 trillion to the US national debt would outweigh the short term losses.

Lastly, the only description for an organization which

a) Can tax a group of 300 million people, b) can decide its own liability, and c) still ends up incurring crippling levels of debt

can only be described as terminally stupid and a drag on society.

"No country in the world has ever succeeded by debasing its currency"