What does it mean when the government goes into "default"?


3 Answers

Janey Profile
Janey answered
It's what happens when a government's deficits are so high that the economy can't provide enough money to meet its interest payments on debt.It's ticks and balances with not enough money coming in and too much going outward.Printing new money isn't the answer as this creates a higher level of inflation and interest rates.

The major side-effects of this economic spiral or "deflation" are:
Decreased prices for goods and services.
Decreased investments and bank interest freezes.
Increased number of fixed-benefits earners..
Recession and unemployment.
Reduced supply and demand.
John Profile
John answered
More of what happened when the housing market blew up. Increased taxes,inflation skyrockets,people lose jobs,homes,life savings, even their lives. While the president and his cronies keep getting paid and even get raises they voted themselves.same thing that has happened since the beginning when governments thought up taxation without  real representation...the poor will get poorer and the rich will get richer and more people will be homeless,have their homes stolen out from under them by the same government who is being paid by their taxes. The same thing that is happening with the mismanaged social security that people have paid into for decades and then told they can not receive their benefits which they worked for their whole lives. In other words the garbage will roll down hill from the top/president/rich.
Arthur Wright Profile
Arthur Wright answered
Means it cant pay its bills including payroll so shuts down except for essential services
thanked the writer.
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Going Nowhere
Going Nowhere commented
And I have so many more questions
Roger Cunningham
Roger Cunningham commented
Default is a financial state wherein a borrower is unable to make its interest payments on its outstanding debt.
Arthur Wright
Arthur Wright commented
Basically the Government shuts down except for Congress, the White House, Military, FBI, and CIA still operate regardless, but anyone who isnt needed goes home without pay. Congress and President still play around to get things back on track

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