HomeOur TeamContact

‘Nothing would come out of’ federal government defaulting on its debt

By Owen Galvez
Published in Debt Management
May 12, 2023
1 min read
‘Nothing would come out of’ federal government defaulting on its debt

As the deadline for raising the debt ceiling of the United States draws near, the possibility of the federal government defaulting on its debt has raised concerns among the public. However, according to some experts, the consequences of a default may not be as dire as many fear.

In an op-ed for Forbes, economist Bill Conerly argues that the idea that a default would lead to a catastrophic economic collapse is a myth. While a default would certainly be disruptive and damaging, it would not necessarily lead to hyperinflation, an economic depression, or a collapse of the U.S. dollar.

Conerly explains that the federal government would still be able to pay some of its bills even if it were technically in default, as it has enough revenue to cover essential payments like Social Security and military salaries. Additionally, the government could prioritize its spending to minimize the impact of default.

Moreover, Conerly notes that other countries, like Argentina and Greece, have defaulted on their debt without causing global economic chaos. While the U.S. is obviously a larger and more important player in the global economy, it is still unlikely that a default would trigger a worldwide financial collapse.

Of course, that’s not to say that a default wouldn’t be a serious problem. It would harm the country’s credit rating, increase the cost of borrowing, and damage international confidence in the U.S. government’s ability to manage its finances. It could also cause significant short-term disruption to financial markets and the economy, as well as lead to political turmoil and uncertainty.

The bottom line, according to Conerly, is that a default would be bad, but not apocalyptic. Instead of worrying about the worst-case scenario, he suggests focusing on finding a long-term solution to the country’s debt problem.

In conclusion, the prospect of the federal government defaulting on its debt can be alarming, but it may not be as catastrophic as some fear. While a default would certainly be a serious problem, it’s unlikely to trigger a global financial meltdown. Nonetheless, it’s important to take the issue seriously and work towards a sustainable solution to the country’s debt problem.


Previous Article
How McCarthy could be kicked out of speaker chair in debt ceiling battle
Owen Galvez

Owen Galvez

Food Critic

What Is Security Debt and How Can You Stop It From Getting Out of Hand?
June 29, 2023
1 min

Quick Links

Advertise with usAbout UsContact Us

Social Media