The US Treasury Department has a problem. It will run out of cash sometime during the month of October. Because of that, Democrats in Congress want to raise the debt ceiling yet again, but Republicans are very leery about Joe Biden’s unchecked spending plans, and have balked at upping the limit of how much debt the country can carry.
Moody’s Analytics released a report that lays out details of what they call a “catastrophic blow” to the US economy that would result if the US defaulted on payments.
Mark Zandi is a chief economist at Moody’s Analytic’s. Here’s his prediction.
“This economic scenario is cataclysmic,”
Okay. Here’s details. The first thing that would happen if there was a default on debt payments and the stalemate were to drag on regarding the debt ceiling in Congress is a massive recession.
The report said 6 million jobs would be wiped away, and unemployment would rise to 9%.
Stock prices would tank. Roughly one-third of value would be gone, evaporating about $15 trillion in household wealth,
The Moody’s report said that the financial markets are not freaking out about this potential crisis right now, which means Wall Street believes that Congress will do what they’ve always done in the past; raise the debt ceiling.
The worst-case scenario according to the Moody’s report would occur if the impasse in Congress drags on and on.
On November 1, $80 billion in debt payments are due. Included in that are payments to people drawing Social Security, plus salaries for active-duty military and pension payments for veterans.
The negative ramifications would last for years. Here’s more gloom and doom from Zandi.
“Americans would pay for this default for generations s global investors would rightly believe that the federal government’s finances have been politicized and that a time may come when they would not be paid what they are owed when owed it.”