The federal government could default on its debt as soon as July, a new forecast from the Bipartisan Policy Center warns, raising pressure on Congress for action.
The prominent think tank forecast Monday that the so-called “X-Date” would likely arrive between mid-July and early October.
Governments incur debt by selling bonds, which guarantee a certain repayment at a certain date. If the government fails to make the bond payments, fewer people will buy bonds in the future. You can’t “just add more” debt if no one is willing to actually lend you money.
Even talking about not making the payments damages the value of future bonds. This kills the dollar.
The really crazy part is that the US is absolutely solvent and capable of paying its debts. There is no good reason for this to even be a point of discussion. Not making the payments only hurts the country.
China would benefit most from the collapsing value of the US dollar.