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Some Possible Consequences of a U.S. Government Default
Econ Journal Watch (2012)
  • JEFFREY ROGERS HUMMEL, San Jose State University

The U.S. government faces a looming fiscal crisis. A default on Treasury securities appears inevitable. The short-run consequences for the economy will be painful. But the long-run consequences, both economic and political, could be beneficial. The most important long-run political benefit would be the imposition of fiscal discipline. The long-run economic benefit would be the alleviation of the future tax liabilities required to service the national debt, irrespective of whether those liabilities are correctly anticipated or not. A historical examination of the state government defaults of the 1840s provides one case study where the long-run consequences were indeed salutary.

  • consequences,
  • government,
  • default
Publication Date
January, 2012
Publisher Statement
Copyright © 2012 Econ Journal Watch.
Citation Information
JEFFREY ROGERS HUMMEL. "Some Possible Consequences of a U.S. Government Default" Econ Journal Watch Vol. 9 Iss. 1 (2012)
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