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5 Ways US Debt Default Would Echo Through Global Economy

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U.S. lawmakers have less than three weeks to avert a default on the country’s sovereign debt by raising the limit on the amount of money the Treasury Department can borrow. Failure to do so would result in the United States purposely defaulting on its debts for the first time in history.

By now, the extent of the damage that economists predict the U.S. economy would suffer in the event of default triggered by bitter conflict between Congressional Democrats and Republicans has been widely reported.

An estimate from Moody’s Analytics earlier this month predicted that in a prolonged default scenario, the U.S. would slide into recession, with the Gross Domestic Product falling by almost 4%. Some six million jobs would be lost, driving the unemployment rate up to 9%. The resulting stock market sell-off would erase $15 trillion in household wealth. In the short term, interest rates would spike, and in the long term, they would never fall…

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