U.S. Treasury Warns of What’s to Come: “Catastrophic Effect… Could Last for More Than a Generation”
October 4th, 2013
The next time someone tells you that the US government is operating in a fiscally sustainable manner and that our economy is growing strongly point them to the latest report from the U.S. Treasury Department.
According to the new report released yesterday all of our worst fears may soon be realized should the United States default on its obligations to creditors, employees, and recipients of state-sponsored benefits.
The report details the consequences of Congress failing to raise the debt ceiling so that the government can borrow more money. The political impasse will likely be resolved in the 11th hour just as it has been during prior showdowns. But, the report has much broader implications.
This is nothing short of an official admission and confirmation of the decades’ long woeful mismanagement of U.S. economic, fiscal and monetary policy.
Here’s what you can expect to happen on that fateful day when our government is no longer extended the credit it needs to cover its trillion dollar commitments:
“In the event that a debt limit impasse were to lead to a default, it could have a catastrophic effect on not just financial markets but also on job creation, consumer spending and economic growth,” the report said.
“Credit markets could freeze, the value of the dollar could plummet, US interest rates could skyrocket, the negative spillovers could reverberate around the world, and there might be a financial crisis and recession that could echo the events of 2008 or worse.”