Trying to predict the future is a tough one. But one thing I am becoming sure about is the collapse of the dollar. Every Fiat currency has an average life span of decades not centuries, before something needs to replace it.
As the debt in the US has to keep climbing due to structure, world wide creditors of the US will stop buying treasury bills real soon. Trying my utmost to understand what is going on around me I predict, like so many that the US will default. Some of the consequences:
Nobody wants the dolllar, it will fall from the current $1.6/£ to $2 or more. It will be cheap to go shopping in New York for a while.
Gold and metals will surge.
Other currencies will become stronger. Nothing will be able to replace the world reserve $, but countries are already trying to use other means of exchange. Other currencies will strengthen: (Like the Yuan, Ruble, Euro).
The world banks will be forced to converge and come up with a difference world currency. SDR will only do in the short term. A new world currency on the agenda?
The exports of the US will become cheaper. This will give the country a chance to launch a wholesome recovery.
In the short term they will have high or even hyper-inflation. House prices will rise over there as will food.
Crude Oil will go up in US$, so taking up the price for the average American at the gas pump.
If the government can no longer borrow. Public servants will start to loose their jobs. Taxation will increase considerably to cover the shortfall, but will not be enough. The police and the other enforcers of the law will be last to get the sack.
Civil unrest like Greece or too big to fail?
US military presence in the world will be questioned. And how will it now be financed?
The fed might have to print more? But they will refrain since it may lead to more inflation.
The wage price spiral will mean that people get paid more. And they might be able to pay off their fixed sum loans.
US Stocks will rise in price too?
Obama will get the blame?
Will the UK follow. Our GDP to debt ratio is higher than that of the US.
Interesting times ahead in any case. In the words of E.Howard, “we need co-operation not revolution”. Ce sera sera.