Originally posted by iNkGeEk
I really want to know what to expect from a crisis of this magnitude. If our economy fails I'm certain it will set off a domino effect across the
globe, but are we talking a world wide market crash and financial collapse? What kind of hardships will there be?
I just posted this in the Ron Paul thread, hopefully it's within ATS rules to copy/ paste your own stuff, but I think it addresses your question:
Basically if we default we will lose our AAA rating. In fact Moodys warned yesterday that they are preparing to do just that. If our rating gets
reduced, interest rates will go up immediately. We're talking about bank-to-bank loan rates as well as mortages, car loans, business loans, etc. The
economic "recovery", as puny and weak as it has been, has been propped up by the low interest rates. A sudden hike in interest rates will not only
kill the recovery, but will likely push us right into a recession. And that's the first shoe.
The second shoe will drop if the two sides in the debt debate refuse to budge and we do default on our debt. The worst fallout from this will be a
"crisis in confidence". The American people will stop buying products for fear that they might lose their jobs. Heck, SS recipients don't even know if
they'll get their monthly checks or not, there's no way they'll be spending money. Foreign entitites that have been big buyers of our debt (such as
China) will stop buying our debt, and in fact may start trying to cash in existing debt while there's still money on the table. If our debt-holders
become afraid that their holdings may be at risk, they may divest. That could lead to a run on our currency and our printing new money to cover the
debts, which in turn will cause runaway inflation.
So you see, debt default is not an answer to the problem, it's the result of not addressing the problem. And if we allow it to happen it will destroy
our country as we know it. Personally I think we'd emerge as a totally different country on the other side with rampant unemployment, broken water/
sewer/ electrical/ road infrastructure, widespread poverty, no entitlement programs, a small disfunctional government, etc.I just don't think people
realize how serious this is. I'm in my 50's and have lived through many economic cycles and I am the last person in the world to worry about stuff
like this, but this situation has me VERY worried.
Originally posted by iNkGeEk
I don't want to hear about how we all need to have a weapons depot that can fend off a small army and that it will be like living the real life
version of Fallout 3. I'm curious as about the actual ramifications.
LOL! You're right, that's not the answer. Sure a weapon or two for self defense is prudent, but preparing for a war is overkill. Look back at the
Great Depression, we're probably facing something similar to that and widespread violence wasn't the issue, rampant poverty was the issue. People
helped each other as much as they could. Disasters typically bring out the best in people's character rather than the worst. That's not to say it was
a happy, pleasant time. I've heard all about it from my older relatives who lived through it and it was horrible. We should do all in our power to
prevent it from happening again.
edit on 14-7-2011 by SavedOne because: typo