A default in the US could cause a stock market crash and panic in the global economy. This will raise questions about replacing the dollar as the main reserve currency. In this respect writer British newspaper The Economist.
If Congress fails to raise the US debt ceiling in time, it could put the country in the first public debt default in its recent history. A stock market crash, a sharp rise in unemployment, a panic in the global economy – all this is quite possible.
The publication noted that after the announcement of the default, investors could initially make a sharp jump to invest in the dollar, which has always been a safe haven during crises. However, given the world’s long-standing widespread distrust of the United States, questions will arise about an alternative to the dollar and its financial system. Given that most countries’ faith in American stability will be lost, restoring it will be nearly impossible.
According to the authors of the article, the situation will worsen with the continued decline in credit ratings. This will cause mortgage rates to rise and hit the real estate sector. Given the fact that corporate bond yields will rise, banks may refuse to lend. In this case, panic will spread in the market.
May 17 investor Jim Rogers declarationThe US dollar is starting to lose its lead as the US becomes the world’s largest debtor.