Question

[Frosty1]

If the US goes into default what happens to my US Savings Bonds? Do they get defaulted on too? Anybody know?

[damntexdem]

1. Going into default means not paying what's due.

So your bonds are safe as long as you don't try to cash them. ;-)

[Denninmi]

2. I've been wondering the same thing.

I have a big chunk of what I was hoping (planning is too strong a word in today's world) to live on in my old age in bonds, mostly I bonds.

[jtuck004]

3. I highly doubt those who own the politicians would let this happen, but

on the off chance it does I think your SB's would be the very, very, least of your worries. Payment for all those commercial things that we depend on for life would cease, and so would most of the world markets if the U.S. defaults on the obligations backed by its full faith and credit. The entire world economy would crash far harder than anything we have ever experienced - the search for food, fuel, and shelter would consume virtually all of our time. There might be some segmenting, but who wants payment in fiat dollars from a country that won't pay its bills? Not can't, won't, here.

But do you really think the wealthy would let the Teabaggers and their acolytes in Congress make U.S. money worthless? After they have gone to all this trouble to move ~87% of all private wealth into the accounts of about 20% of the population, leaving about 12-ish % for the rest of us?

[Art_from_Ark]

5. They might own 87% of the wealth

but only a small bit of that is US cash.

Real estate, precious metals, resource companies, etc., will still have "value" even if the paper currency becomes just so much scrap paper.

[jtuck004]

6. Sure, and I shouldn't lump it all in together, but a part of what helps

us all live is the liquidity - being able to exchange our stuff for food, fuel, etc. If we default, I think the vast majority of that would come to a grinding halt, and that, it seems, would have a real impact on value. Also, I think value might hinge on what one can protect.

One of the differences I see today vs history is that we are so dependant on a fuel-based system to get everything to us - especially food and fuel. If that breaks, I think a lot of how we see value may change. All the big stuff that is so dependent on the supply chain may become difficult to defend, and value may increase for places that can produce some resources like food, fresh water, maybe machine parts.

But despite the fact that there are always some crazies ready to pull the pin in a crowd, I hope the odds that a real default could take place are lower than we may think. Those that seem to want that (the Glen Beck types) really do think that they will come out on top, which makes it a more dangerous proposition.

Hope things are ok for you in your neck of the woods. Still lots of disinformation, but at least the motivations of the sources are easier to figure out these days ;)

[Art_from_Ark]

7. If a default does occur,

as you said, the Glenn Beck types might think they will come out ahead in an economic catastrophe scenario, but I really hope it never comes to that point because most of us will be in very deep doodoo. I just had to deal with a simple scenario like that back in March, when there were gas shortages, empty shelves and voluntary rationing in grocery stores, as well as temporary outages of water and electricity, all due to the earthquake and tsunami. While the people around here tended to grin and bear it, I wonder how Americans would react under similar circumstances.

As far as my neck of the woods goes, we just had a little earthquake as I was typing this. Nothing to get alarmed about here, at least.

But now they are talking about "hot spots" with higher radiation levels in some places relatively far from the reactors. My own city has a radiation reading of about .08 microsieverts per hour, which the High-Energy Physics Lab says is normal, and that data is being provided by at least 4 different entities in the city. Yet, 15 miles and farther to the south, I have read reports that say that radiation levels there are 3-4 times higher, and that their normal radiation levels would be 2-3 times lower than my city's. I just don't get that at all. There are no topographical or geological differences between these cities (relatively flat plains with some hills, all underlain by massive deposits of the Kanto Loam) and we are all basically located along on a line that runs from Fukushima to Tokyo, with my city being closest to the reactors. I think maybe I'll end up getting my own radiation meter and take my own measurements.

[jtuck004]

8. I have watched this network of private owners,

http://www.radiationnetwork.com/

haven't really seen remarkable change, and it's more what's radiating nearby, not soil or foodborn sources, etc., But interesting.

There is a map for Japan as well.

[Yo_Mama]

4. The likely mechanism of default would be inflation

In other words, a drop in the value of the dollar relative to other currencies, rather than an explicit default.

Thus your bonds would probably pay out as scheduled, but living standards in the US would dramatically worsen (all imported items would rise in price, especially stuff like medicines and fuel), and our ability to fund Social Security and Medicare would be greatly diminished. External sources would not want to buy US debt because of the related currency losses.

Since we have to sell new Treasuries to even make good on the Medicare/Social Security trust funds, it is likely that your other retirement streams of income would be greatly diminished.

That's a best guess.

[blue97keet]

9. Who gets to be top dog in bankruptcy court (if there is one)

China or Social Security?

[Kennah]

10. No, but the date you can cash them in changes to ...

... never.

;^>