| Nobody really knows. We have a good idea that it would be bad (worse than if the .gov hadn't stepped in to prop up the economy in 2008) but the actual practical consequences are literally unknowable. If you're nihilistic you may think that a disruption like this would be a salutary thing for the United States forcing us into the long overdue reappraisal of our place in the world and our ability to dictate terms to the rest of the planet. But the truth of the matter is that our far flung logistical system means that many of us are more dependent on global trade than we realise and that a sovereign default on the part of the United States of America would have repercussions that will affect pretty much everyone on the planet who has an electrical outlet in their house. Fucking with the flow of money at that scale will certainly cause chaos and civil disorder as primary effects, but it will also disable most of the tools we have to control chaos and civil disorder. Think of it as being like a power outage, only it's a money outage. Your bank won't be able to count on getting it's regular operating loans, your employers bank, the same, various payments into the system for housing vouchers, food stamps, agricultural subsidies, road construction contracts , all the paper that keeps our society from collapsing will stop moving. Some of it may resume, but if enough of the economy is broken... So best case scenario: economic hardship, generational unemployment, millions of people displaced from their homes, and the US can wave bye bye to the dream of hegemonic leadership, economic or military, for the foreseeable future. Worst case scenario: War. It is traditionally the cause and cure of sovereign default. And while we (the US of A) are currently fighting multiple colonial wars (mideast, north africa, south america) which is part of what has spun up the numbers on the debt; we have not really begun to tap our poulations war making capabilities, one of the few untapped resources we have left. |
What would happen is the government would be forced to make cuts in other areas. There is still enough money for most of the entitlements and the military but other areas would undergo drastic cuts.
Government Spending to stimulate the economy doesn't work, the best quote is from FDR's own Treasury Secretary and creator of the New Deal where he said in front of congress, "We have tried spending money. We are spending more than we have ever spent before and it does not work... I want to see this country prosperous. I want to see people get a job. I want to see people get enough to eat. We have never made good on our promises... I say after eight years of this Administration we have just as much unemployment as when we started. And an enormous debt to boot!"