If the U.S. Treasury went bankrupt, America would experience the largest depression in the history of the country. First, let’s look at how we reached this point in our country’s history.
The Road to Our Nation’s Bankruptcy
Figures vary but it is estimated that the U.S. owes creditors at least $16 trillion dollars. One reason is that the U.S. government keeps asking creditors for more time to pay our debt. Doing so causes the debt to increase because additional interest charges accrue.
In an effort to generate more money to pay our debt, the U.S. Treasury prints more money and bonds. All this does is weaken the value of our dollar and our treasury bonds.
Five main disasters would happen to our country if the U.S. Treasury went bankrupt.
1. American’s Life Savings Would be Worth Almost Nothing
American economist Thomas Sowell claims that today’s $100 is worth less than $20 in the 1960s. What this means is that our life savings are not worth as much as we thought and will not sustain us as long as we had planned.
2. Taxes Will Increase Dramatically
When the U.S. Treasury is no longer able to pay its debts on time, the government will increase taxes on American citizens in an effort to raise enough money to pay what it owes to creditors. If our taxes increase by fifty percent, we will have less money to keep a roof over our heads and food on our tables.
3. Lives Will Be in Danger
Without sounding overly dramatic, desperate people do desperate things. People will be so angry when they run out of money that they will resort to stealing. Violence will increase. Since the government will be broken, it will not have enough law enforcement to control looting and violence.
4. Government Benefits to Citizens will Disappear
Simply said, the government will have no funds to provide people with food stamps, Medicare, Medicaid, or Social Security. This leads to the question of how people will survive. Unfortunately, there is no good answer to that question.
5. Lower Standard of Living
Businesses will close resulting in increased unemployment. If people are unemployed and their savings are almost worthless, they will not be able to afford even the necessities of life. This brings us back to the fact that the government will be broke and will not be able to help its citizens.