In case you haven't kept up with the latest news, there's been a lot of talk about such a possibility these last few weeks.
It's almost as if they are testing the waters, seeing the people's reaction, but most of all making sure they are completely terrified of such a possibility so as to make sure the mass goes along with them in their decision.
Investors protect against U.S. default
Why Wall Street doesn't seem worried about default
Bernanke: U.S. default would cause 'major crisis'
What would it be like if US Defaults?
For one second lets suppose the mad debt race is halted in August 02. What really happens?
From our own experience we know that defaulting on your countries debt is indeed catastrophic as Wall Street and the politicians that work for them predict. What happens is that the US would fall into the feared 3rd world economy status Americans never want to experience. Worst of all, credibility is lost in a way people just don't comprehend. When that sort of trust shatters, it's like trying to put together a crystal cup: You can glue it back together but it will never be the same, the illusion is lost. Make no mistake, defaulting would cause poverty and a significant decrease in the American lifestyle for decades to come.
But on the other hand you can't avoid asking yourself, why do the creators of the greatest economic crisis known to man kind want to continue rising the debt level? What's in it for them? Well my dear friends, it's the mechanism they have been using to grow rich beyond their wildest dreams and doing so on by sending that debt to the American's middle class through inflation and higher taxes, while the bailout money goes straight into their pockets.
You may think billionaires are done for,t hey don't care about money, and you'd be wrong. Few billionaires retire and spend the rest of their lives with their families in some far away beach paradise. The nature that made them rich in the first place makes them keep going for more and more money in spite of not needing it.
Continue doing what has caused the economic crisis in the first place could hardly be called a solution. Would you fix your own debt situation by getting yet another credit card to burn and go further into debt? Of course not, we all know the hard choice that must be made. Cut down your expenses, save money and get out of debt. We all know thats the solution on an individual case and it's the same thing here.
If America puts an end to its ever growing debt not everything would be bad.
First of all, on an elemental level it would stop the vicious debt cycle, both on an economic and political level. The greedy criminals that have caused this would have to find other ways of getting richer. The political cost would likely end the current administration in the next elections. That is if social unrest can be controlled and they don't take the easy way out by resigning, forcing anticipated elections like it happened here.
Second, a cheaper dollar would mean that America is at another level compared to foreign economies. A more competitive dollar would mean that "Made in USA" is viable on a broader spectrum, small and medium companies could be started and strive.
The horizon looks bad either way. The decisions to be made aren't easy and none offers a good, let alone ideal solution, but you still have to ask yourself if going further into debt is the right choice.
I never knew anyone that got out of a hole by digging down even more or stopped a fire by throwing gasoline at it.
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