Treasuries would plummet. Foreigners would dump UST so fast our heads would spin. The USD would crater and the imported inflation jolt would be massive and hugely deflationary as spending by consumers would fall off a cliff. Gas would jump to $8//gallon, etc.
The US Treasury would start issuing it's own currency again in an attempt to a) pay the rapidly increasing interest payments and b) to light a fire under inflation until it reaches a minimum of 10%. All sorts of money-for-nothing programs would come out of thin air -- free tuition, free mortgage down payments, wildly expanded food stamp program, all sorts of things to put cash into people's hands.
Or if they were too slow, gov't would contract by 50%, the army would perform a coup d'etat, and then they'd use the Treasury to start printing money etc. Or instead of a coup, the military withdraws from all over the globe and a surge of revolutions are triggered elsewhere.
Collapse, pandemonium, revolution, massive depressions... lots of outcomes possible depending on how the gov't, military, and/or people respond. None of them are good, in my view. The time for good response was 10 years ago.
I don't think it's possible to know exactly how it would play out, similar to living on a farm and having a tornado pass 100 yards from your house. But change will be a-comin', and it would not be pretty.
Sad thing is, change will come whether we delay it or not. The delay just means those that have perpetuated and amplified the crisis will have their assets squirreled away all over the globe. |
