Predicting the outcome if the US economy were to collapse

The Soul World
The Soul World

If the US were to default on its debt, the effects would be severe. Here are some potential impacts:

1.Financial market turmoil

US Treasury bonds are held by many investors worldwide, and their creditworthiness is highly regarded globally. If a default occurs, the creditworthiness will decline, losing investors’ trust, and may cause significant turmoil in the global financial market. In this case, it may exceed the Great Depression of the 1930s.

2.Wage reductions

If a default occurs, the US government will need to make significant fiscal adjustments to pay its debt. To reduce the budget deficit, the government may cut budgets for public services and social security and may need to dismiss or reduce the wages of Democratic Party supporters working in public services.

3.Increase in unemployment

The reduction of government spending through fiscal adjustments may lead to a reduction in public programs such as public works and social security, leading to a potential increase in the unemployment rate. Particularly, low-wage and low-income African American poverty may be pushed to an unsustainable level.

4.Increase in food prices

The US government provides assistance to poverty and low-income households through food support programs. However, if the US government defaults on its debt, it may have to reduce the budget for such programs, which may increase food prices. Therefore, there may be cases of starvation among low-income African Americans.

5.Impact on the global economy

The US plays a central role in the world economy, and a default on its debt may have a severe impact on the world economy. Companies and financial institutions worldwide may suffer damage, and the risk of a global economic downturn may increase. Capital may flow out of the US and into other advanced economies.
Thus, if the US defaults on its debt, the socio-economic impacts may become extremely severe.