If the u s defaults on its debt1/5/2024 "We don't know, we don't want to know but it's going to be big." "No one knows what the impact is," he said. dollar is the world's most important currency, a default would have a far reaching impact. Mukherji said defaults in other countries usually result from economic and financial stresses, and that political factors were driving the debt ceiling debate in the United States, which has a recovering economy. read more A two-year suspension of the debt ceiling expired in July and Democrats and Republicans in Congress remain at odds. 18 if the debt ceiling is not raised or suspended, leading to its first-ever default. Treasury Secretary Janet Yellen has warned that the government could run out of cash by Oct. In 2011, S&P downgraded the top rating of the United States by a notch to its current AA-plus level. "That's why we have a AA-plus rating, the second highest on our scale." ![]() "We don't think it's going to happen," he told Reuters. Treasury bill, note, or bond would push the U.S. Mukherji said S&P's action would be the same in the case of debt nonpayments by other countries and that even a default on a single U.S. Of course, maybe I'm wrong - however, I don't really feel like finding out.Register now for FREE unlimited access to Register There would be a painful, painful Depression (that's Depression with a capital D) that would very likely rival the "Great Depression". Those people who think that the United States would recover quickly in the event of a default, a la Argentina, are completely delusional. This is just a taste of what would almost certainly transpire in the event of a debt default in the United States. The United States would need to make extremely painful spending cuts, which would throw the entire nation into disarray.Ī US default would have dire ramifications on our major countries throughout the world, and it would be very likely that there would be a chain reaction of sovereign debt defaults. Let's assume that the US hit the IMF up for a loan - this loan would come with harsh stipulations, as we've seen in other countries over the past couple of years. The IMF has approximately $200 billion available in lendable resources. Social Security would likely be a distant memory - we've raided the Social Security piggy bank to fund the nation's deficits over the last number of years - where would the money for Social Security come from in the event of a default? The US government owes programs such as Social Security, etc. The country's "safety net" would likely no longer exist. Unemployment in the country would spike to obscene levels. In addition, credit would dry up virtually overnight, which would force untold numbers of companies to shutter their doors. Savings would be wiped out due to rampant inflation and the collapse of the major North American market indexes as well as the real estate market.Ĭompanies would be crushed by a US consumer that would no longer have any buying power. US consumers would be obliterated nearly overnight. The housing market would crash even more as credit would become nearly impossible to obtain. Goods would soar in price.Įquity markets would crash. Filling your car might cost $200 or more. The collapse of the dollar would lead to a massive increase in inflation. The collapse of the dollar would lead to a sharp increase in the cost of nearly everything, as more US dollars would be needed to pay for imports. You think that the US dollar has experienced a large decline over the past couple of years? Watch what happens if the United States defaults. The collapse of the US dollar would cause absolutely havoc throughout the world. ![]() Some people point to a country such as Argentina as evidence that a debt default is not such a bad thing - well, the Argentine Peso isn't the world's leading reserve currency. Next up - the US dollar would absolutely collapse, as confidence in the country and its currency would evaporate overnight. This would result in much higher borrowing costs for the country - surely not a surprise. In the event of a default, the nation's pristine credit rating would be trashed. If you ever run into a person like this, you can be comfortable in the fact that they have absolutely no idea what they are talking about. They will then flash you a knowing grin as if to say "What is the rest of the world going to do about it if the United States decides to default?" ![]() "I think that the United States should just default". When discussing the nation's current debt woes ($14.2 trillion and climbing rapidly), you will occasionally run into the odd kook who will say something like: What Would Happen if the US Defaulted on its Debt?
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