What are some potential benefits to allowing the debt to default (not raising th

  1. BizGenGirl profile image88
    BizGenGirlposted 6 years ago

    What are some potential benefits to allowing the debt to default (not raising the debt ceiling)?

  2. randslam profile image82
    randslamposted 6 years ago

    There are none.  The repercussions will be felt throughout the global markets and we will enter a new era of economic depression the likes of which will not be enjoyed.

  3. Bretsuki profile image78
    Bretsukiposted 6 years ago

    If any nation defaults on national loan payments. It means that nation immediately faces severe economic hits.

    The currency falls through the floor.

    Lender Nations immediately close all sources of loans.
    Internally generally there is massive super-inflation.

    A prime example would be the German Weimar Republic of the 1920's. Hyper inflation there meant that one million marks in the morning had more buying power than ten million marks at the end of the day. And to make it worse that million marks might have been the price of a loaf of bread.

    Suggestions by some people who support the US default on loans is irresponsible at least.

    Few modern nations can afford no-national debt. Balancing a budget is not entirelypractical for a nation. The practical ideal is to have continuous circulation of debt. Sometimes allowing to rise, sometimes allowing the debt to fall. But keeping payment levels within tolerable margins.

    The current US debt is dangerously close to the levels where it can just support the debt. Much more could tip the balance. But this also does provide the US some strength. As with the banks in the recent crash, lender nations cannot afford to see the US default. If it did, they too would probably default within hours as they too borrow money from nations such as the US.

    National debt is therefore similar to a friendly loan, you borrow $20 from a friend and they do the same with you, at anyone time one or other of you may need to call in the loan but you are happy to let it ride as you value the security and friendship. If that friend refused to repay the loan on demand, you might feel this soured the relationship and walk away.