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What Happens If The U.S. Defaults On Its Debt? Here's Why It Won't

Money For the Rest of Us

CHAPTER

The Five Principles of the Federal Reserve

The Federal Reserve would do whatever it took to keep the U.S. government from defaulting on its debt, says John Defterios. The interest rate on that debt needs to be lower than the rate of economic growth, he adds. Most defaults have been countries where a large portion of that debt was in something other than the country's home currency. For your long-term investments, I don't think it's prudent to move out of those because of the debt ceiling crisis, defterios says. But if you need short-term cash now, potentially yes, but that money should have been in the stock market first.

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