What would happen if the US economy collapsed?
Rumours and murmurs from within the US authorities seem to indicate that a major fiscal stimulus program is on the verge of being announced as the US economy takes a further downward turn. But what would happen to the worldwide economy, and local economies, if the US economy was to collapse?
The simple fact is that governments around the world cannot afford to see the US economy collapsed because this is, and has been for some time, the engine room of the worldwide economy. If US business was to stall or money markets were to freeze then this would effectively kill the business arena overnight and have massive knock-on effects in international markets, both investment and trade.
However, one of the major issues of the moment is the fact that the US authorities have already invested billions upon billions of dollars, as has the UK government, into a previous economic stimulus program. With tax income still relatively low, benefit payments rising and budget deficit problems in the US it is unclear at this moment in time exactly where the US authorities would lay their hands on the funds required. This is a very difficult and a potentially catastrophic situation and one which needs to be addressed on a worldwide basis as soon as possible.
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