The way I'm looking at it is like a business or a charity. When a business or charity goes bankrupt, the customers or donors do not. They've paid their money, and if the busines or charity misappropriates it, it's on them. The government is created by the People, it is funded by the People, its leaders are chosen (theoretically, anyway) by the people. However, it is not true to say that the government IS the people. (That's actually the basis for Communist theory). The people may be harmed by an insolvent government (If for no other reason than the devaluing of the currency), but the people themselves are not bankrupt.