What happens when USA goes too far in debt?
The USA is creeping up to $16 trillion in federal debt. For most people, it's hard to imagine that the USA would ever go "belly up" so to speak. Other countries like Greece or Argentina? Sure, but the USA is too big to fail. We can't seem to accept that the world's economic and military superpower could ever fail.
But it's happened before. Empires fall all the time. When was the last time you heard of the Pound being the world's reserve currency?
But in the past, when a superpower fell from grace, another, or several others, just took it's place. Could that happen today? Or would the financial fallout of the world's biggest economy be so devastating in this age of globalization that we will see the financial destruction of most of the world?
I know Canada would be hit very hard, at least initially. Around 80% of our exports go to the USA, so imagine 80% of your foreign economy disappearing overnight. Since a lot of our exports are raw materials and energy, I am fairly certain we could eventually restructure our economy , find new export countries, but the initial "nuclear blast" so to speak would cripple us.
How do you think the rest of the world would fare?