Thread: After US bankruptcy, then what?

I've been thinking about this for a while now, what will realistically happen when the federal government goes bankrupt? Forget the "if", it's inevitable. And it's not part of this discussion.

Premise: The US defaults on major international loans and is forced into bankruptcy. What happens next?

My position has been that most states will survive quite well. These are states with a long history of balanced budgets, some sense of sovereignty with the federal government, and a sense of how the Constitution defines the flow of power (from the people to the states onto the feds). Texas is the most obvious example, as is Alaska, but so are most of the Southern states and some of the far mid-west states. These states would undoubtedly print their own currencies, assume responsibility to secure their shores or international borders, make treaties with border states and prosper quite well. The large contiguous area of red pictured below might form a multi-state treaty to consolidate these new responsibilities.



Due to its huge retired Population dependent on now non-existent social security, Florida would be hard hit. Their main export, tourism, would also suffer greatly as tent-cities spring up everywhere. They do have off-shore natural gas deposits, however, that could be used to make the state financially sustainable.

New England is unlikely to survive as individual states. They lack the natural resources necessary to sustain such dense populations. Same with the Rust Belt. I predict a flow of refugees south and west.

California would likely break into at least two states, and as many as five. Conservative counties in the north would see this as an opportunity to amputate the dead weight of Southern California.

How will your state survive?

I'll have to think on it quite a bit before I can come up with a full response, but with regard to tent cities, I don't think they'd be in issue in places where there isn't an influx of people looking for new lives without the structure of the US intact. The absence of our current financial/governmental system means people aren't getting evicted. (With the exception of gangs taking over and kicking people out with no concern for any merit behind it) That being the case, cities would have more housing than people in short order.

Honestly, I believe the 'rust belt' is in a far better position than you are willing to admit. Certainly in a much better position than the historical south. Regardless, I sincerely doubt we'll see mass population movements south and west.

With the scenario you lay out, which has the US essentially breaking up, i believe race issues will come to the fore and will drive the majority of population movement in the opening stages

All the conservative States would die first, as they are the ones most dependent on Federal aid. Look it up if you don't believe me.

China would eventually invade the majority of the Coastal states, the inner landlocked ones would necessarily become clients of clients, (how else could they trade?) since China would never outright annex the state but only make it a sort of protectorate. Japan and Taiwan would get some leftovers and the UK might take some of New England, for sentimental reasons assuming they could afford it somehow.

In general, we'd end up a third world country, however, many people might find themselves better off than before.

Btw, the US has been bankrupt for several decades now. Nobody cares.

[QUOTE=John Drake;1972346]All the conservative States would die first, as they are the ones most dependent on Federal aid. Look it up if you don't believe me.

China would eventually invade the majority of the Coastal states, the inner landlocked ones would necessarily become clients of clients, (how else could they trade?) since China would never outright annex the state but only make it a sort of protectorate. Japan and Taiwan would get some leftovers and the UK might take some of New England, for sentimental reasons assuming they could afford it somehow.

In general, we'd end up a third world country, however, many people might find themselves better off than before.

Btw, the US has been bankrupt for several decades now. Nobody cares.[/QUOTE]

The US is still making accounting entries for the vig on the loans, but can this go on forever any more than the real estate bubble did?
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Originally Posted by Damn Yankee

I've been thinking about this for a while now, what will realistically happen when the federal government goes bankrupt? Forget the "if", it's inevitable. And it's not part of this discussion.

Premise: The US defaults on major international loans and is forced into bankruptcy. What happens next?

My position has been that most states will survive quite well. These are states with a long history of balanced budgets, some sense of sovereignty with the federal government, and a sense of how the Constitution defines the flow of power (from the people to the states onto the feds). Texas is the most obvious example, as is Alaska, but so are most of the Southern states and some of the far mid-west states. These states would undoubtedly print their own currencies, assume responsibility to secure their shores or international borders, make treaties with border states and prosper quite well. The large contiguous area of red pictured below might form a multi-state treaty to consolidate these new responsibilities.



Due to its huge retired Population dependent on now non-existent social security, Florida would be hard hit. Their main export, tourism, would also suffer greatly as tent-cities spring up everywhere. They do have off-shore natural gas deposits, however, that could be used to make the state financially sustainable.

New England is unlikely to survive as individual states. They lack the natural resources necessary to sustain such dense populations. Same with the Rust Belt. I predict a flow of refugees south and west.

California would likely break into at least two states, and as many as five. Conservative counties in the north would see this as an opportunity to amputate the dead weight of Southern California.

How will your state survive?

Interesting map, you realize that on day one, the federal government of the blue area would be running a large surplus, and the federal government of the red area, would need to cut spending in a big way, and raise taxes as the first order of business.

Originally Posted by goober

Interesting map, you realize that on day one, the federal government of the blue area would be running a large surplus, and the federal government of the red area, would need to cut spending in a big way, and raise taxes as the first order of business.

Nah, all they'd need to do is raise the price of the food they produce.

Rots o ruck growing enough food in, say, MA to support your urban population.

Oh for gods sake... you go bankrupt... alot of suffering... you start again.

It wouldn't be the end of the world... only your empire would be gone.
Happend to worse and better nations before
They usually don't fall apart or suddenly fall back into the middleages. We will see

The US can't really go bankrupt since it can print its own currency. It can suffer from hyper-inflation as a result of such currency printing. The scenario you describe would be an extremely distant possibility in the event of hyper-inflation. I suspect some (fiscally responsible) states would push for their own local currencies based upon a gold or other tangible resource standard - this is a right of the states that the Federal government has tried to suppress, although the constitution says that the congress has the power to coin money, it doesn't say they have the SOLE power to coin money. Those states that did so would still be able to successfully trade with other states for goods and services.

Originally Posted by MattInFla

Nah, all they'd need to do is raise the price of the food they produce.

Rots o ruck growing enough food in, say, MA to support your urban population.

Of course our new red third world country would be competing against the rest of the third world to supply us with cheap foodstuffs, so rather than raise prices, I think they might have to drop wages, and prices.