Rep. Jaime Herrera Beutler, R-Camas, voted recently with her fellow House Republicans to deny a raise in the nation’s debt limit. This has been viewed as a tactic to force Democrats to agree to kill Medicare and to cut the tax rate for the rich by a third. I believe Republicans have assured Wall Street, behind closed doors, that they don’t really mean it. But, with the newly-elected radicals in Congress, who knows?
What would happen if the U.S. defaulted on its debt? According to the brokers I’ve spoken to, we would see the following. All treasury bonds and notes would become instantly worthless, which would destroy the bond market. The stock market would crash. Bank deposits would no longer be insured. Cash would become all but worthless, creating catastrophic inflation. Food would disappear from markets. Gas would become unobtainable. Tens of millions would be thrown out of work, and the remaining workers would not get paid, no taxes would be collected, and Social Security and payments to our troops would eventually cease.
This is just for starters. Chaos will run in the streets, banks will fail around the world, and the Chinese will get mighty ticked, as we owe them about a trillion dollars.