3 ms·

Makes sense. What are the consequences of default?

• s1artibartfast 3y ago
  Either having to balance a budget or a downward cycle where more and more interest is required for debt, leaving less and less for function of government.
  • catlover76 3y ago
    To be clear: the consequence is that, the next time around, nobody will lend to us if we need it (which is why we would have to start balancing the budget)?
    • s1artibartfast 3y ago
      Next time is every single year because the US, like most countries, need to borrow to run the government.
    • hippoSquid 3y ago
      Yes we would need to immediately start running a balanced budget. It would probably be a long time before we could borrow again. If we ever did borrow money again, we would be paying a higher interest since we've shown lenders that we can default. It would also mean $33T in assets disappearing from the economy. That's a massive amount that would bankrupt tons of individuals/companies that lent the money. $2.8T of that amount is the social security trust fund which means we need to also instantly cut social security too. $7T of the debt is held by other countries who wouldn't be happy with us either.