I haven't read this in detail, but it looks like it addresses your topic:http://www.greatreality.com/DebtFAQ.htm
Why can't we just cancel the debt? Looks like we're in real trouble folks! The trust is gone! Check this out: Willem Buiter warns of massive dollar collapse http://www.prisonplanet.com/willem-buiter-warns-of-massive-dollar-collapse.html
We can't cancel it (default) because real people would be hurt—lots of real people, very badly hurt.
Some people say, "It's not really a debt, because we owe it to ourselves." It would be closer to the truth to say we owe it to each other—and it isn't owed equally to all Americans.
Defaulting on the debt would do great damage to many pension funds, life insurance companies, banks, state, county and municipal governments, and foreign governments.
When you—or your parents—or your grandparents are ready to retire, and cash in life insurance policies or pension funds, the money must be there. In fact that happens every day. But we don't have the money to pay what's owed, so we borrow more, further adding to the debt.
A huge amount of the debt is owed to the Social Security Trust Fund. When, in a few years, that fund goes from positive to negative cash flow, the money has to be available. If it hasn't been repaid to the fund at that time, it will have to be raised through additional borrowing, or additional taxation.
Internationally, the consequences of a default are hard to imagine. World trade as we know it is dependent on stable financial structures and international trust. The U.S. economy is an immense part of the world's financial structure. The world may not trust us politically, but if they couldn't trust us financially, the impact on the world economy, and on our own, would surely be catastrophic.