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by ssss11 909 days ago
I’m curious if they defaulted how would the creditors get their cash? USA has the largest army, is the largest economy (?) and USD is the trade currency so I’m wondering what would happen in a default. Would things continue business as usual?
2 comments
manymatter 909 days ago
When a country defaults nothing violent happens internationally.. Their payments or lack of payments deteriorate their currency from hard to soft and they have trade that's mostly limited to hard currency they get from exports.

I think this would be particularly brutal if unrelated international trade were still in dollars and everyone wanted to cash out.

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Ekaros 909 days ago
They would get no more new debt.

It is revolving system. Old debt is paid with new debt and then even more debt is taken for consumption. If this stops, it means no one would loan again. They would trade in alternative ways. Or then the rates must go up to match the risk premium of not getting principal back.

End result is probably starting to print money. Which then will just lead to even higher rates to get the return.

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