Kyle Field Shade Chaser said:
So what happens when America goes bankrupt?
They just get told bad boy, and keep running just like normal the same as all the big business that go bankrupt and stay in business?
We have a printing press so we'll never default or go bankrupt, but we can trigger a recessionary, inflationary spiral that wrecks our currency and economy. Nobody knows exactly how they would play out, but it would involve credit downgrades, rising rates to compensate investors for the credit downgrades, increased printing to cover the expanding deficit (because rates are rising and we're paying more on interest), and maybe a loss of reserve currency status and/or a flight out of the dollar which would exacerbate all 3.
It's really hard / impossible to predict this stuff because in large part a currency is measured relative to other currencies, and pretty much all of the world's other countries + currencies are even stupider than we are. So if we get a couple of downgrades and our deficit expands, but demand for the dollar skyrockets because foreign investors see the dollar as safer than their currencies, the bad effects (increased money supply, increased deficit) are being offset by foreign demand. These are just a few elements - in reality the dollar's future is a mix of dozens of major forces pulling it in different directions.
The smart thing is to get our house in order, but there's no appetite for that. That's not surprising in a country that pays well over $100B in credit card interest every year. We are a nation of "I want it now, consequences be dammed."