What happens if the US defaults? — The Bump
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What happens if the US defaults?

I don't want to turn this into a political debate, I am seriously just curious what happens if the US defaults?
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Re: What happens if the US defaults?

  • I'm not super into politics, but honestly, I have tried searching for what would happen... the only thing I can find is the stock markets would plummet and we wouldn't be able to get much help from other countries since we would have defaulted on a lot of our "deals" with them.  I know zero specifics and I'm not even sure that is correct, that is just what I can find (in an easy search).
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  • Basically, the US wouldn't be able to pay all of it's bills.  I think SS checks, etc might not get paid.  Interest rates would increase.  The US credit rating would drop.
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  • image I*Heart*Stuart:
    Basically, the US wouldn't be able to pay all of it's bills.  I think SS checks, etc might not get paid.  Interest rates would increase.  The US credit rating would drop.

    This.  No more checks would get mailed, the rate on US Debt would go up.  If you are worried about the return on your bank accounts wait awhile and then go buy your US T-bills Big Smile 

     

    BIG Brother born 10/19/07 little Brother born 1/31/12
  • Yep. What the pp's said. Interest rates on loans and credit cards will go up, the stock market will plummet, and social security and other programs will get cuts. Basically...it's bad, very bad. 
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  • We are trying to refi our house right now so if it defaults we personally are F*ucked!  Very scary!  Also if our credit rating goes down as a country it causes foreign investors to be wary of us.  If you thought the economy has been bad for the past few years it would be nothing compared to what this would do. 
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  • If foreign (and even domestic investors) stopped buying government bonds then the US would have to raise interest rates to attract buyers.

    Eventually the US would be like a person that has too much credit card debt and can't afford to have nice things because they have to make huge payments on the interest every month.

    Alternatively, the US could print more money.  But that would cause inflation and weaken the buying power of the US dollar.  It might not be so bad for young people with jobs because wages should also rise but it would be really rough for retirees if gas or grocery prices rose rapidly.

    It would increase the rates on any kind of loan in the US and maybe the world:  cars, houses, student loans, credit cards.  Young people would probably have a lot of debt and might put off having children or buying a house.

  • image tfarabians:
    We are trying to refi our house right now so if it defaults we personally are F*ucked!  Very scary!  Also if our credit rating goes down as a country it causes foreign investors to be wary of us.  If you thought the economy has been bad for the past few years it would be nothing compared to what this would do. 

    To this note, if the SS checks stop coming and the Gov't cant pay gov't workers, imagine what that unemployement number will do to spending and to the stock markets. 

    Not to cause panic because they will come to a plan, so those checks will still come, but that doesn't mean it won't happen at the cost of higher interest rate or high inflation. 

    BIG Brother born 10/19/07 little Brother born 1/31/12
  • Seriously, I don't quite understand how our country has as much debt as it does and still has financial credibility in the world.
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