What Happens If the U.S. Defaults on National Debt?
The U.S. deficit often feels like an arbitrary thing considering it's always rising. However, it's anything but arbitrary. If the government were to default, tough consequences would ripple out on a global scale:  Interest rates would soar. Currently, the federal interest rate is extremely low while the economy recovers from the COVID-19 pandemic. However, a U.S. debt default could shift this far into the other direction. It would cost businesses, governments, and loan recipients of all kinds a lot more to borrow money. The value of the U.S. dollar would take a beating. Not only that, but the U.S. dollar would lose its place in the list of global world currencies. Meanwhile, investors would hop on other world currencies like the euro or yen. U.S. import prices would rise through the roof, which would make it extremely expensive to live in the country. Inflation would hit hard and fast. Any government employee would be out of luck for their paychecks. Also, any citizen receiving or set to receive Social Security, Medicare, and Medicaid benefits would lose those programs entirely. Payments on student loans, tax returns, and government facilities would shut down. Unlike a government shutdown that impacts only non-essential programs, the impacts of a U.S. debt default would be far-reaching.