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3 Ways Regular Americans Will Be Hurt by a Debt Ceiling Default

October 15, 2013 in Blogs

By Adam Levin, Huffington Post

From credit cards to mortgages, pain will be felt across the country.

Many Americans this week may be asking themselves: Why should I care about the debt ceiling, or the — barring Congressional action — coming default? You've heard about it in the news but, much like the sequester or the shutdown, you're not quite sure how it'll affect your daily life.

Put simply, unlike corporate tax cuts, a debt ceiling default will have a trickle-down effect that will affect your wallet in one way or another.

The debt ceiling is a limit, set by Congress, for how much the U.S. Treasury is allowed to borrow to pay our country's bills — which are racked up by Congress. In your household, if you want to buy something for which you don't have the money on hand, you might ask a bank to loan you the money or use a credit card and pay the debt off later. Banks and credit card companies decide how much credit to extend to their customers — but, on the global market, countries, banks and individual and institutional investors decide how much money to lend a country by buying bonds.

One of the current stalemates in Congress is whether to allow the government to borrow more to pay the bills for which Congress already spent the money. And while you can stick a microphone in front of any one of a number of conservative Republicans — from Rep. Steve King (R-IA) to Rep. Ted Yoho (R-FL) to Rep. Dave Schweikert (R-AZ) to Rep. Mo Brooks — and have them reassure Americans (some of whom are already missing paychecks or veterans benefits because of the shutdown) that the debt ceiling default will have no effect, the truth of the matter is that economists all know this is a bad thing for the country and for regular Americans.

So while you might only be inconvenienced by the government shutdown, the debt default could have a serious impact on your personal bottom line, just in time for the holidays. Obviously, any account on which …read more


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