Michael Wagner on The National Desk: What Happens If the US Defaults on Its Debt?
On June 1, the U.S. could come face-to-face with an unprecedented debt default if the White House and lawmakers do not reach a compromise to raise the debt ceiling. While the markets have seemingly remained unbothered by this possibility thus far, what might happen if a default does occur? The National Desk turned to Michael Wagner, chief operating officer of Omnia Family Wealth, for insight on what investors like you need to know.
According to Wagner, a Treasury default would be similar to a hit on a personal credit score. “If we go out there and we need to borrow money to fund our deficit, we are going to be charged a higher and higher rate for our credit because we are showing a history of non-payment,” he explains.
Wagner also points out that a default could make inflation, which is already at its highest in decades, worse. If the value of the U.S. dollar goes down, the cost of importing consumer goods goes up, which in turn will reverse most of the progress made by the Federal Reserve’s interest rate hike.
Click here to watch the entire segment, which aired on various local news outlets on Monday, May 22.