Dirzzit said:
1.Interest rates will go up (credit card, mortgage)
2.Countries will stop trading with the US (It's like not paying your rent)
3.The stock market could possibly crash
4.Banks will seize everything they can to prevent getting hurt
This will FUCK THE US UP. Remember what happened to Greece? It will be worse, A lot worse.
Eeeehhhhhh... not quite.
Interest rates are controlled by the Federal Reserve Bank and are generally used as a tool to control overall inflation, with the target inflation rate being about 2%. International trade with the U.S. will not cease, just some valuations will be re-adjusted. The stock market will crash yes, but the market is always driven by fear and greed; this will be a major fear stimulus. Banks in general have been forced to behave, so any bank that has been following the new rules - as enforced by the current administration - should be just fine.
Here's what will happen if the U.S. misses the deadline for making its debt interest payment (that's what the deadline is) - and yes, I am using Greece as a model:
1. The U.S. Sovereign Bond rating will be cut slightly.
On paper, this won't look like much. However, it will eclipse all other news items for about two weeks. This will lead to:
2. "Loss of confidence in the Greenback."
The U.S. dollar will decrease in value relative to other currencies. Canada will be pleased. China will not. News of the economic woes of the Euro zone nations caused the Euro to lose value, and stay down for over a year.
3. It will cost the U.S. significantly more to borrow money.
A lot more. It's not generic interest rates that will be higher, it is interest rates on U.S. Treasury Bond yields that will be higher. This means interest paid (by the U.S.) to existing Treasury Bond holders will increase automatically, effectively increasing the total amount of Federal Debt. And it will cost the U.S. more to borrow money in the future. Since we are talking about revolving credit, these two together could potentially DOUBLE the Federal deficit, in the sense that we'll be paying much more over the period until the debt is paid. Its. That. Bad.
4. Inflation/deflation
This is the big neon pink elephant in the room. Nobody is quite sure what will happen. A weaker dollar is usually good for trade, but the economic aftermath (including trade and currency fluctuations) may push the costs of goods and services higher. The only good news on the horizon is that with partial troop withdrawals, the prices of gasoline and some materials should decrease. However, I would expect gas prices to jump over $4/gal for about two weeks on a default - there's no real reason for that; speculators are just stupid.
5. Stock market/money market
Stock market will be down, and keep going down on all subsequent negative news. This will literally bleed money from all listed companies. Mass layoffs will follow, with increased unemployment - and every report of layoffs, and every new report of larger unemployment will push the market lower again, etc etc etc. Money market accounts will typically have some T-bills in their portfolios. So returns for money market accounts will be lower. Basically, anything with exposure to U.S. Bonds will feel the squeeze.
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"Look at what Regan did it worked"
Sir, please stop talking until you learn to think for yourself. Reagan did not accomplish half of what you think he did. Ronald Reagan presided over the largest expansion of the U.S. Federal Government in history. Federal taxes are lower now than they were then, which is also why the U.S. is still in debt thirty years later. Now 1% of Americans control more money than the bottom 90% of the population combined. It's too bad Conservatives have been holding down the minimum wage all that time. The extra tax revenue could have paid for a lot of infrastructure that is desperately needed.
The issue of primary importance, however, is health care costs. Even if the debt ceiling was raised right this minute. We still have an enormous problem with health care costs. Its too bad that Conservatives were no help with that either.
