"What if the Government Defaults?"

reply to post by inforeal


What if the government defaults?

The short answer is: IT Won't

At least not in the sense you think. Lets clear up a few things:

1. not raising the debt ceiling does not mean instant default, it merely means you will have to pay our interest without borrowing. It's very possible, and plenty of countries do it. What that could mean is severe austerity with public employees not being paid and public services stopped (like a government shutdown)

2. The U.S. will not default as long as those wonderful Federal Reserve members can create reserves out of nothing. Inflation? Whats inflation? (sarc/)

3. The debt ceiling will be raised in a theatrical and dramatic fashion (probably 20 trillion in cuts over the next 50 years ). and QE3 (called something else) will be announced shortly afterwards. Afterall those $469 Billion in maturing bonds from QE1 can't roll themselves over

4. The real default will be when the pedestal of having the reserve currency is kicked from under us when most nations stop using the dollar. The default will be in the form of full currency destruction

5. The debt ceiling is nothing to worry about, but what is coming after that is the problem. Get some silver, gold and food, it'll be a bumpy ride

The way I understand this, is that if the government defaults, whomever gets a government paycheck; won't.
The blame game will go into overdrive and politicians on both sides of the aisle will wee themselves in the fear that they won't get re-elected. (Term limits would probably solve the debt crisis faster than any party plan because they'll be less caring of their own weak futures).
They will eventually agree to a plan, taxes will be raised because the GOP will blink first, and life will go on. Our credit rating will drop (S&P will drop us regardless of the plan specifics, we've screwed up too much for that to change) and America will be speaking "Greek" to the rest of the world.
The dollar will be replaced by another form of currency in terms of a global currency exchange, and it'll be a loooong road to recovery.

I know this post should probably go into the prediction forum, but this is what (as an economic noob) I see happening.

i feel we shouldnt hand out any bailouts anymore and that we shouldnt do anything about this default. let the damn thing fail. we will start it all over and let be hopefully a better system and scrap this thing we have now. its being run into the ground so let it die already

Originally posted by inforeal
The point is to remember that it is these Tea Party congress people who are totally responsible for this manufactured crisis . . . .

What revisionist history book are you reading? The "Tea Party" members of congress mostly weren't even in congress as this crisis was manufactured through years of assinine spending, in particular from 2006 to 2010.

But yes, let's blame the folks that say "enough is enough" rather than throwing rotten fruit and eggs at the brainless imbeciles in DC who actually spent the tax payers into this economic pit of Hell.

I would love for the government to default to such a level that it cannot pay its military.
That would be coolest and most ironic eventuality.
Why?
The US army is there to defend the constitution.
A constitution that says any enemy foreign or domestic.
The army would come home, be unable to support themselves or their families and ultimately will join in with the riots burning into the USA.
We'd now have the US military fighting a domestic enemy, the US government

I'm hoping any of my fellow ATS members might have an idea of what could happen in Australia if the US defaults and its a worst case scenario of consequences?

Any indication would be very valuable and appreciated

reply to post by Agit8dChop


That's when false flags come in. The gullible idiots will then rush to "defend" their country.

reply to post by Nomad451


Slowdown in EU and Japan which means slowdown in China which means slowdown in Australia.

so if the us defaults, could we see the great depression on a global scale times 100?