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What happens if us defaults on debt?

If the United States were to default on its debt, it would have severe consequences for the country's economy and financial system, as well as for the global economy. Here are some of the potential consequences:

1. Economic instability: A default would lead to a loss of confidence in the U.S. government's ability to repay its debt, causing investors to demand higher interest rates to compensate for the increased risk. This could lead to a recession or even a depression.

2. Damage to the U.S. dollar: The U.S. dollar is the world's reserve currency, meaning that many countries hold it in their foreign exchange reserves. A default could cause a loss of confidence in the dollar, leading to a decline in its value relative to other currencies.

3. Increased borrowing costs: If the U.S. defaults on its debt, it would become more expensive for the government to borrow money in the future, making it harder to fund programs and services.

4. Political instability: A default could lead to political instability and a loss of confidence in the U.S. government, both domestically and internationally.

It's important to note that a default by the U.S. government is considered extremely unlikely, as it would have serious and far-reaching consequences for the global financial system. The U.S. government has always paid its debt obligations in the past, and it's expected to continue to do so in the future.

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