2007-09-19 06:10:47 · 6 answers · asked by J Ray 5 in Social Science ➔ Economics
Actually I read a paper on when countries do that and the conclusion of the paper is that nothing much happens. You would think that people would no longer lend to the country, but after a year or two they are right back in. The profits they make are higher than the expected losses.
Now, the US is bigger than usual, so if a bank had too many assets in US reserves it would be a problem, but I don't think that is the case.
It would very likely cause no big problems.
2007-09-19 09:17:01 · answer #1 · answered by Anonymous · 0⤊ 0⤋
A bunch of banks worldwide (but primarily in the U.S. and Japan) would go belly up. A lot of people would see their savings diminish or disappear altogether. The impact of that realization on the consumer spending would probably be a major recession. The U.S. government, at the same time, would have to run a balanced budget (no one in their right mind would lend to a government that just defaulted) and thus would lack the means to do anything about it. All in all, you are looking at another Great Depression, except in 1929, the default was not a single event, but rather a series of millions of small defaults by farmers unable to repay their loans due to very low crop prices...
2007-09-19 06:19:55 · answer #2 · answered by NC 7 · 0⤊ 0⤋
The US cannot just declare its debt null and void because it is owed to other countries. Unless those countries want ot release the debt.
2007-09-19 06:16:37 · answer #3 · answered by holykrikey 4 · 0⤊ 0⤋
what would happen if you declared that the balance of your home mortgage is "null and void" and just started over?...
think of this on a global scale...
2007-09-19 06:18:39 · answer #4 · answered by kinn2him 3 · 1⤊ 0⤋
The world'd explode..or else some countries would be very very mad.
2007-09-19 06:19:50 · answer #5 · answered by David P 2 · 0⤊ 0⤋
Good idea.
GIT ' R DONE!
2007-09-19 06:15:17 · answer #6 · answered by Anonymous · 0⤊ 0⤋