EdwardBaiamonte
Platinum Member
- Nov 23, 2011
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What are the consequences of a US default?
No one really knows exactly what would happen, but the likelihood is that markets around the world would plunge and global interest rates would rise.
This is because if the US government could not repay the money it owed bondholders, the value of the bonds would decrease. And the yield - the return the government pays to an investor - would rise. This is because it would be perceived as a less safe investment.
This would prompt interest rates around the world, which are often tied to those of US Treasuries, to spike.
Furthermore, the impact on the US's creditors could be dire. Japan, for instance, owns about $1.14 trillion of US debt - which is equivalent to 20% of its annual economic output.
In the US, Goldman Sachs estimates that $175bn would immediately be withdrawn from the US economy and it could lead to a very deep recession.
BBC News - What happens in a US debt default
How does a nation that prints it's own money, default? lol
No, The United States Will Not Go Into A Debt Crisis, Not Now, Not Ever
The reason why it’s not true is because we live in a fiat currency system, where the United States government can create an infinite number of dollars at no cost to meet its obligations. A Treasury bill is a promise that the government will give you US dollars–something that the United States government can produce infinitely and at no cost.
That’s the reason why interest rates on United States debt have only gone down even as the debt has ballooned. That’s the reason why Great Britain has very low rates on its debt despite having very high debt-to-GDP. That’s the reason why Japan has an astounding debt-to-GDP ratio and still enjoys some of the lowest rates ever. Investors have bet for so long that there would be a run on Japanese debt and have ended up so ruined that in financial circles that trade is called “the Widowmaker”
No The United States Will Not Go Into A Debt Crisis Not Now Not Ever - Forbes
Hmm. How does a nation that prints its own money default? Maybe you could ask Russia, Germany, Argentina and Zimbabwe?
I am fairly certain no one was printing their money for them either.
Mark
They the worlds currency? Oil tied to them? lol
NOW think what happened with them???
And? The ONLY thing that protects paper money is the BELIEF that the money will be honored. Once that belief is lost, nothing else matters.
Mark
Is the US currently in that position? lol
liberals have always wanted easy money or liberal printing policies which obviously leads to a lack of belief in money. You can count on liberals to always take the stupid position.