What bothers me is nobody is willing to even hypothesize. That’s what screams availability bias to me: we don’t know what will happen, so we’ll just assume it either won’t happen or it will be business as usual.
I don’t even know what field (failure-ology? domino-tics?) I need to read in to actually make an informed guess, but the best guess with what little I do know (for a worst case scenario) is the following, in roughly chronological order:
Massive stock market crash
One or more ratings agencies downgrade the US from its AA rating.
Value of the dollar plummets, inflation ($100 is barely enough for even a cheap meal)
Run on the banks. The FDIC theoretically can still bail out failing banks by taking money from non-failing ones but who knows where there is a tipping point before they all fail (and presumably are all taken over by the FDIC). Even if they eventually manage to reopen them all, days or weeks pass before some people can access their accounts.
Government starts bouncing checks to employees, contractors, veterans, social security recipients, etc. They, along with thousands of people who never realized they depended on something that depended on regular checks from the government, are now overdue on their rent/mortgage/bills.
Some employees continue working for IOUs, some stay home, hard to predict which federal services are operating where. State and local services still mostly functioning.
Massive wave of seizures and foreclosures by creditors who are themselves in a desperate financial crunch. At this point, it no longer matters whether or not the debt ceiling is raised, the chain reaction has started.
Bouncing checks and repos trigger riots and in the chaos various ethnic/political/religious grudges also get rekindled. Again, some areas hit harder than others. Probably not a good time to live in an urban slum.
With police over-extended, increase in violent crime and property crime.
With the dollar’s lower purchasing power, it’s even more expensive to import oil, which has a further inflationary effect on almost every consumer good sold in the US. Food is particularly hit because fertilizers are made with petrochemicals.
Economies of various other nations collapse, with similar results.
...and I don’t know what happens next. Presumably at some point someone puts a bullet through your head and takes whatever you have left that’s worth stealing. Alcor can’t help you because they can’t afford liquid nitrogen, nor the cost of transporting your remains to Arizona in the first place. The end.
Total time scale: about a year. Hopefully I’m wrong and hopefully other posters and point out where.
The TEOTWAWKI scenario doesn’t look likely. Do note two things:
The Treasury isn’t prohibited from spending money or paying back the debt. It’s prohibited from borrowing more. Effectively that’s the same thing as saying that the Federal governement will have to run a balanced budget starting right now.
The Fed. The Fed can do whatever it wants and guess what it can do—it can print money! Moreover, it can print money and give it to anyone it likes, for example banks (threatened by bank runs) or, probably, even the Treasury.
seizures and forclosures are inconsistent with cheap meals costing a hundred dollars due to inflation. It’s one or the other—either there’s not enough money getting pushed to debtors, or there’s a surplus of money and debtors can pay their mortgage easily with inflationdollars.
There are two different mechanisms at work here. The inflation is due to a devalued dollar. The foreclosures are because you lose your job as a direct or indirect consequence of the recession.
If a cheap meal costs $100 instead of $5, then your $100k mortgage is backing a $2mil house, and you can borrow against your instant equity (even with no income or job).
The interest rates may suck on borrowing against your home equity, but it’s better than losing your house.
That’s the trillion dollar question.
What bothers me is nobody is willing to even hypothesize. That’s what screams availability bias to me: we don’t know what will happen, so we’ll just assume it either won’t happen or it will be business as usual.
I don’t even know what field (failure-ology? domino-tics?) I need to read in to actually make an informed guess, but the best guess with what little I do know (for a worst case scenario) is the following, in roughly chronological order:
Massive stock market crash
One or more ratings agencies downgrade the US from its AA rating.
Value of the dollar plummets, inflation ($100 is barely enough for even a cheap meal)
Run on the banks. The FDIC theoretically can still bail out failing banks by taking money from non-failing ones but who knows where there is a tipping point before they all fail (and presumably are all taken over by the FDIC). Even if they eventually manage to reopen them all, days or weeks pass before some people can access their accounts.
Government starts bouncing checks to employees, contractors, veterans, social security recipients, etc. They, along with thousands of people who never realized they depended on something that depended on regular checks from the government, are now overdue on their rent/mortgage/bills.
Some employees continue working for IOUs, some stay home, hard to predict which federal services are operating where. State and local services still mostly functioning.
Massive wave of seizures and foreclosures by creditors who are themselves in a desperate financial crunch. At this point, it no longer matters whether or not the debt ceiling is raised, the chain reaction has started.
Bouncing checks and repos trigger riots and in the chaos various ethnic/political/religious grudges also get rekindled. Again, some areas hit harder than others. Probably not a good time to live in an urban slum.
With police over-extended, increase in violent crime and property crime.
With the dollar’s lower purchasing power, it’s even more expensive to import oil, which has a further inflationary effect on almost every consumer good sold in the US. Food is particularly hit because fertilizers are made with petrochemicals.
Economies of various other nations collapse, with similar results.
...and I don’t know what happens next. Presumably at some point someone puts a bullet through your head and takes whatever you have left that’s worth stealing. Alcor can’t help you because they can’t afford liquid nitrogen, nor the cost of transporting your remains to Arizona in the first place. The end.
Total time scale: about a year. Hopefully I’m wrong and hopefully other posters and point out where.
The TEOTWAWKI scenario doesn’t look likely. Do note two things:
The Treasury isn’t prohibited from spending money or paying back the debt. It’s prohibited from borrowing more. Effectively that’s the same thing as saying that the Federal governement will have to run a balanced budget starting right now.
The Fed. The Fed can do whatever it wants and guess what it can do—it can print money! Moreover, it can print money and give it to anyone it likes, for example banks (threatened by bank runs) or, probably, even the Treasury.
seizures and forclosures are inconsistent with cheap meals costing a hundred dollars due to inflation. It’s one or the other—either there’s not enough money getting pushed to debtors, or there’s a surplus of money and debtors can pay their mortgage easily with inflationdollars.
There are two different mechanisms at work here. The inflation is due to a devalued dollar. The foreclosures are because you lose your job as a direct or indirect consequence of the recession.
If a cheap meal costs $100 instead of $5, then your $100k mortgage is backing a $2mil house, and you can borrow against your instant equity (even with no income or job).
The interest rates may suck on borrowing against your home equity, but it’s better than losing your house.