What happens if...on August 2nd the US defaults?

What happens if the US defaults on their obligations come August 2nd?

Well, Charles Plosser, president of the Philadelphia Federal Reserve Bank says, "It could be very bad.” He goes on to say; “At some level we don't really know what the consequences could be. It could be very serious. It could be less serious. Do we really want to run that experiment?"

Read that again: could be bad, we really don’t know the consequences, could be very serious or less serious. Huh???

Fed Chairman Ben Bernanke last week warned that a default could have "catastrophic" effects on financial markets. I’ve been searching the internet for Bernanke’s explanation of the ‘results’ of catastrophic effects. I have yet to find his answer. If you can find anything definitive please pass along the link.

There are however a multitude of journalistic financial “experts” and an equal number of “economists” who seem to know exactly the results of “catastrophic” effects. How do these guys know exactly what is going to happen? They didn't get it out of a text book. The Great Depression can't give any real clues to what happens when the richest, most powerful economy on the globe goes belly up. Remember, it was the stock market crash, not a bankrupt government that caused the Depression. There's a huge difference. I think the talking heads keep talking to justify their own existence, but I really don't believe they have a clue either. And if they do then why aren't they giving any solutions to the problem. If they all know what is going to happen then why aren't they offering any solutions. Are there no solutions? If these catastrophic events are going to occur what are they planning for their own families and friends? Are they hoarding food, water, battery's, seeds and ammunition? Are they liquidating everything so as to have enough cash to survive the onslaught? You get me here? Doom and Gloom all day long. Democrats and Republicans bickering over the last piece of pie at Thanksgiving. Even the proposals out of Washington aren't going to help you and me. They will only make our lives harder while those piss ants in Washington continue to play in their exclusive club. I'm sick and tired of it and I want answers. I want solutions, not political rhetoric and pandering.

So, the defecation hits the rotary oscillator on August 2nd now what? Real life will continue and our personal economies will be effected one way or the other so what gets hit first. Rising interest rates is a popular choice and a catastrophe just about everyone can agree on, but what interest rates specifically? Have you noticed all the talking heads just say "interest rates", but don't get specific. Are they referring to conventional mortgage rates, the Prime rate Discount rate, Treasury rates, credit card rates, all rates? Give us a clue guys so we can plan accordingly.

Will conventional mortgage rates rise? Probably, they can’t get much lower, so how much are they going to go up? And if they do will that affect you? Only if you have to refinance or move, but if you already have your low rate then what does that really mean to you? Really, will it affect your day-to-day life? Probably no more than if Starbuck's raised the cost of a double shot Mocha.

Will the Prime Rate rise? Well, it can’t get any lower either so it will probably go up too, but by how much? Well, first of all we know the Prime rate, Fed Funds rate and the Discount rate collectively can be considered the accelerator pedal of the economy. Right now the Feds have it pushed to the floor (lowest possible rates) to keep the economy moving. Now if the pedal is pushed to the floor imagine what would happen if Uncle Ben (Bernanke) pulled his foot right off the pedal (increased rates) and increased interest rates by 1%, 2% or even 3%? Seriously, what do you think would happen? Same reaction as a vehicle; the US economy would come to a grinding halt. The economy would come to a dead stop, but without any coasting. It would be more like you slamming on your breaks at 50 mph 20 feet in front of a stop sign at a busy intersection. Now that would create catastrophic results. Do you think the Fed wants to see that happen?

My take on the current economic situation is this; nobody has a clue what is going to happen. We’ve never been here before so how can anyone predict the future if there is no historical data to base a decision? If Washington doesn’t make a ‘debt’ decision on August 2nd what will happen August 3rd? When our alarms go off that morning will we all take a deep breath and peak thru the curtains to see if our world looks the same? And if they don’t make a decision will the effects be the same as an atomic bomb being dropped on the country? What if there is resolution by say the 4th or 5th? Will that make a difference and make everything ok? Please tell me, give me specifics because I really want to know WHAT IS GOING TO TAKE PLACE IF THE BOYS IN WASHINGTON CAN’T GET THEIR S*@T TOGETHER???

I know one thing for sure, on August 2nd and pretty much every day there after I am going to get up, visit the bathroom, go start a pot of coffee, take a shower and head to my desk. I will continue teaching people how to take control of their financial lives. To help them get more out of what they own and what they earn so no matter what Uncle Ben and Cousin Timothy (Geithner) do, my customers will have a leg up because they were proactive with their financial decisions and theior families futures. You see that’s what needs to happen if you plan on surviving on your own terms. You really need to take control of your own economy so you can counter the effects of “Washington’s” economy. That's right; it's not "our" economy because we have nothing to say about it, it is "Washington's economy. But there is "your" economy and you have all the power to make your own decisions regarding the day-to-day operations of your personal economy. We hope you make the decision to control your economy so Washington's economy doesn't bring you down with them.

If you’re going to wait for the boys in Washington to plan your financial future then you are in for a long hard life. You see, if you are reactive to their plans then you have no other choice but to take what they give you. However, if you are proactive and take precautionary measures that can counter act their ill-advised, misdirected plans then you have a much better chance of maintaining control, freedom and authority over your finances.

What happens in the "Nation's Economy" isn't nearly as important as what happens in "Your Economy." Visit TruthInEquity.com if you REALLY want to be a free thinking, independent citizen.
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