Is the US default a reality?

[durop77]

Now all the news is writing about a possible default, is it real in the modern world, or is it information propaganda? How do you feel about this situation and what will happen for the rest of the world, you should be afraid of inflation or subsidence of the entire market. how to act in this situation and not lose money? It is worth now to run to withdraw money from the account or change it to the currency of other states. What kind of alignment awaits and what to analyze in general. Perhaps the extreme situation is a technical default, which does not pose a particular threat, but you need to prepare for non-standard options for the development of events.

[EarnOnVictor]

It's good to know that the USD has never defaulted on its debt but hit the debt ceiling on 19th January of this year. This has raised concerns, speculations and debates amongst experts and the key people involved in the US government, including the House and Senate. I know the country is filled with knowledgeable people, and a very good decision would be reached before it would cause a default. The default would cause chaos in the US as the government would not be able to fulfil its basic obligations and this would cause a chain reaction to the detriment of the country.

The debt ceiling should have been reviewed long years ago since the US population now and the government's obligations have increased compared to when the agreement was reached. However, this will not cause panic to the extent that people will now be leaving the US.

Sure, it will affect them, but it's the government and its workers that will be directly affected. While those that rely on the government for tax returns will also be affected. Be it businesses, families or individuals.

[Husires]

I think you are referring to the US default on its debt, which is linked to the debt ceiling crisis https://en.wikipedia.org/wiki/United_States_debt_ceiling, whose solution is political, not economic. So, will the US default on its debt? Absolutely not, because this is how the global banking system works.
Politicians will continue to argue until the last moment, and after making some concessions from one of the parties to avoid political damage, an agreement will be reached and the debt ceiling will be raised. Therefore, do not worry, even if the markets did not calculate any possibility of the United States falling behind, otherwise we would see strong corrections in stocks.

The pace of raising the debt ceiling is terrifying, and perhaps after 10 years we will see a real danger of continuous raising operations.
https://edition.cnn.com/2023/05/15/investing/premarket-stocks-trading/index.html

[Nhazwrath]

The usa as far as I am aware has defaulted twice prior.   During Woodrow Wilsons presidency and when the usa came off the gold standard.   

[slapper]

Headlines screaming US teetering on the financial cliff? Drama, folks, pure drama! Media loves a show. Could Uncle Sam default? In theory, sure. But in reality? That's another kettle of fish. Imagine the US economy as a mega ship – it might get a bit wet, but sinking? Not without a fight! And a US default? It'd send shockwaves worldwide, something the big shots would dodge like a bullet. So, should you be racing to the bank, ready to snatch all your dough? Doubt it. Spread your bets, keep an eagle eye on the economic pulse, and don't let the media circus spook you. Remember, panic is the worst money manager ever!

[koleusdat]

Default in such a large country is impossible, it has many allies and creditors who will help prevent this. A lot of things revolve around the United States, and such a default takes place only if it is, as you wrote, technical. In fact, it doesn't mean anything and it doesn't make sense to move from place to place and so on.

[Yamane_Keto]

The usa as far as I am aware has defaulted twice prior.   During Woodrow Wilsons presidency and when the usa came off the gold standard.  

This is not accurate. Under the Marshall Plan, the United States subsidized the economies of war-torn nations in Europe and Japan in the form of cash in exchange for a commitment that every dollar abroad could be converted into gold at $35 an ounce. This was possible with the huge reserves of gold that the United States possessed. .

With the recovery of Germany and Japan and the increasing public debt from the Vietnam War and the rise in inflation, this led to a decrease in the value of the dollar against the gold that the United States owned, and with the need to print more dollars, maintaining the price of $ 35 an ounce was impossible, and here came the shock of Nixon with Executive Order No. 11615 in 15 August 1971 without taking any approval from the countries holding the dollar.

Did the US default here? No, global growth has recovered after this shock and the subsequent oil crises, and the petrodollar has become the new benchmark.

In any case, when the economic conditions are bad, the United States always finds a way to pay its debts, and with the exposure of most of the world's economies to the dollar and the existence of a global monetary reserve from it, it is impossible for the United States to default on its debts as it has never done before.

[durop77]

The usa as far as I am aware has defaulted twice prior.   During Woodrow Wilsons presidency and when the usa came off the gold standard.  

This is not accurate. Under the Marshall Plan, the United States subsidized the economies of war-torn nations in Europe and Japan in the form of cash in exchange for a commitment that every dollar abroad could be converted into gold at $35 an ounce. This was possible with the huge reserves of gold that the United States possessed. .

With the recovery of Germany and Japan and the increasing public debt from the Vietnam War and the rise in inflation, this led to a decrease in the value of the dollar against the gold that the United States owned, and with the need to print more dollars, maintaining the price of $ 35 an ounce was impossible, and here came the shock of Nixon with Executive Order No. 11615 in 15 August 1971 without taking any approval from the countries holding the dollar.

Did the US default here? No, global growth has recovered after this shock and the subsequent oil crises, and the petrodollar has become the new benchmark.

In any case, when the economic conditions are bad, the United States always finds a way to pay its debts, and with the exposure of most of the world's economies to the dollar and the existence of a global monetary reserve from it, it is impossible for the United States to default on its debts as it has never done before.

I adhere to the fact that your answer is correct. It is impossible for such a large country to fall into default. There may be some speculation and markets and inflation, but not default.

[franky1]

what people dont realise is although US "owes" other countries $30trillion+
other countries "owe" the us substantial amounts too

an easy option is 1-for-1 cancelation of linked debts between countries

EG if japan hold $1.1trill of US debt. but japan has more then $1trill separately owed TO the us.. they can cencel each others debt thus bring both sides debt totals down

take it one stage further
if japans high DEBT amount of $10trill is owed to multiple countries. the US can do a deal where if the UK cancels its debt with japan. the UK can cancel its loan to the US.
and the US can then further cancel its loan to japan. as a 3 way debt reduction

[Wolyusi]

Default is not possible. This is done for information agitation. In the past year, some countries were defaulted, as a result, it was of a technical nature. Nothing has changed in these countries at a critical level . And default is the same inflation that almost the whole world is in now.

[odolvlobo]

Default simply means that the U.S. does not pay off a bond or make a payment as required according to the contract. Such a default is entirely possible and there are legal and economic ramifications.

The possibility of a default is already having an effect.  In 2011, the U.S. credit rating was downgraded due to a similar possibility of default. It is likely to be downgraded again this time, even if there is no default.
 
If there is a default and it is brief, and payments are delayed maybe only a few days, then I believe that the immediate impact will be relatively small, though it will cause more severe problems down the road.

However, if the default drags out, it could cause severe economic problems even if the debts are eventually repaid. For example, U.S. bonds are treated globally like cash. Large payments are made using bonds instead of dollars. If U.S. bonds suddenly lose all value because they can't be redeemed, even temporarily, these payments can't be made and global commerce will grind to a halt.

[hugeblack]

what people dont realise is although US "owes" other countries $30trillion+
other countries "owe" the us substantial amounts too

I think you forgot the payment deadlines here, as the United States currently has a debt that is overdue, while many countries that borrow from the United States may not want to pay their debt now.
China, for example, all of its trade surplus is used in the form of dollars for nothing but manipulation of the value of yuan in order to promote exports.

I agree with you that the United States has several ways of repayment, so it can, for example, devalue its currency and thus reduce the value of its debts, but there are many catastrophic effects of this decision.
The easiest solution is more debt.

[mindrust]

Now all the news is writing about a possible default, is it real in the modern world, or is it information propaganda? How do you feel about this situation and what will happen for the rest of the world, you should be afraid of inflation or subsidence of the entire market. how to act in this situation and not lose money? It is worth now to run to withdraw money from the account or change it to the currency of other states. What kind of alignment awaits and what to analyze in general. Perhaps the extreme situation is a technical default, which does not pose a particular threat, but you need to prepare for non-standard options for the development of events.

It is real. The other possibility is also as scary and as real. That's hyperinflation. The US can't forever print money to pay their debts. That's impossible. If you see the history of the Roman Empire, it collapsed the same way. There are only 2 exits from here and both of them leads to a road covered with shit. A) Immediate default, B) Hyperinflation. The debt gets paid either way. We already know which one they are going to choose and that's option B.

[davis196]

Now all the news is writing about a possible default, is it real in the modern world, or is it information propaganda? How do you feel about this situation and what will happen for the rest of the world, you should be afraid of inflation or subsidence of the entire market. how to act in this situation and not lose money? It is worth now to run to withdraw money from the account or change it to the currency of other states. What kind of alignment awaits and what to analyze in general. Perhaps the extreme situation is a technical default, which does not pose a particular threat, but you need to prepare for non-standard options for the development of events.

The possibility of a US default is real only for the Russian and Chinese propaganda.
I'm sure that the Republicans will agree for increasing the debt ceiling, in exchange of something else(I don't know what).
By the way, I watched some banker from JP Morgan being interviewed on CNN and he said that there shouldn't be a debt ceiling at all.
I guess that a part of the US bankers want the USA to have unlimited debt, without any ceilings. I wonder what will happen to the US dollar, when such thing happens.

[Tony116]

Now all the news is writing about a possible default, is it real in the modern world, or is it information propaganda? How do you feel about this situation and what will happen for the rest of the world, you should be afraid of inflation or subsidence of the entire market. how to act in this situation and not lose money? It is worth now to run to withdraw money from the account or change it to the currency of other states. What kind of alignment awaits and what to analyze in general. Perhaps the extreme situation is a technical default, which does not pose a particular threat, but you need to prepare for non-standard options for the development of events.

I don't remember exactly how many times this rumor happened, but if I'm not mistaken, it's been a topic for years, and I've never seen the US government default. I don't know what is the purpose of American politicians when they make this news every year. But if anyone still believes this will happen, it is naive and you will continue to be led by their media. I'm pretty sure that will never happen until their economy is actually challenged by China or some other great power. For now, that's not going to happen, and you'll keep hearing about it next year.

[indo1]

I think the rumors are just to bring down crypto developments as it has happened so many times before. well if it is profitable for those who can control the current price of crypto we call whales. it's a good idea to really save on fiat because a big sell-off of crypto assets is imminent. but it will never hinder the development of crypto until now. crypto continues to grow with many trends until now.

[kryptqnick]

I don't think it's purely propaganda, but I don't believe in the default either. There's always a risk to money printing and raising the debt ceiling, and something should be done about it. Unless there's a perception of a big threat, things normally don't change. So I think the default rhetoric is meant to big this big issue that unites people and their political representatives, pushing for more financial accountability of the state and stopping to rely on borrowing even more money (even though in this particular situation it may be the fastest or the only way out). The US will be fine, even though they're playing with fire.

[el kaka22]

I don't really get why Mccarthy pushing his luck, I mean he can do whatever he wants to, nobody can force him to do anything, but lets be honest and realize that Democrats have enough votes to block him anyway, so he can't get whatever he wants, he can negotiate for a positive voting, which would mean he will ask for cuts, but he can't get the cuts neither all by himself at least. So all in all this would just go on.

Eventually public will ask when he will finally raise it, because otherwise millions of government workers won't get paid and they will know who is responsible for it and they won't enjoy that and republicans will bleed out even more votes and will be in trouble. They are barely standing as it is, doing this would only hurt them.

[panganib999]

Now all the news is writing about a possible default, is it real in the modern world, or is it information propaganda? How do you feel about this situation and what will happen for the rest of the world, you should be afraid of inflation or subsidence of the entire market. how to act in this situation and not lose money? It is worth now to run to withdraw money from the account or change it to the currency of other states. What kind of alignment awaits and what to analyze in general. Perhaps the extreme situation is a technical default, which does not pose a particular threat, but you need to prepare for non-standard options for the development of events.

 Nope. The US, however it may look to most people out there (even to me, I feel like they've fallen from grace and has become a shell of its previous glorious state), there's no way in hell that legislators in the country would allow itself to default from debt. As what @Husires has told you in his post, it's all political issues really, and barely economical, because for the most part the reason why there's no movement in the part of deciding whether to increase the debt ceiling or not is because legislators and politicians couldn't decide at the moment on what the best path to take is. Eventually they come and will come into a solution, that's always been the case for US anyway. The US will not default on its debt, financial crash would be delayed another time, and all that kind of stuff.

[Gyfts]

It's political theatre, every time. There is no penalty for the U.S. to raise the debt ceiling, and whoever's in office faces the brunt of the political theatrics in order for the other side to try and get their political victories.

A country that prints its own currency can't default on its debt, they would simply print more currency units if required. That's been the general practice since the gold standard was done away with, except debt's been exponentially rising over the last few decades because the U.S. created a hole that they can't escape. The interest on the debt alone will consume them, requiring even more borrowing.