Odd Lots Mitu Gulati on Whether Trump Could Restructure US Debt
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Apr 18, 2025 
Mitu Gulati, a law professor at the University of Virginia and an expert in sovereign debt, dives into how the Trump administration could approach a radical restructuring of U.S. debt. He examines the complexities and legal implications of the controversial Mar-a-Lago Accord and its potential impact on financial norms. Gulati also explores the historical context of the 14th Amendment regarding public debt, and the hypothetical yet intriguing idea of acquiring Greenland, linking it to broader geopolitical stakes and moral responsibilities surrounding national debts.
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Bonds Operate on Norms and Rules
- Debt bond contracts function both on legal terms and on social norms; these norms can rapidly change narratives.
- Exploiting contract rules over norms can yield unexpected financial strategies.
US Bonds Allow Maturity Extensions
- U.S. Treasury contracts likely allow extending bond maturities without breaching contract terms.
- Such maturity extensions would not legally count as default, preserving more flexibility.
Historical Precedent for Debt Restructuring
- The U.S. can legally extend debt maturities even by 100 years through executive and Congressional action.
- Historical precedents like 1930s gold clause abrogations show markets may not punish such moves harshly.