ST. LOUIS, MO (KTVI)-- Unless the White House and republicans in congress can agree to raise the nation's borrowing limit by next Thursday, the US may default on paying interest on some of its debts. If that happens, what could happen to your finances?
Many republicans say nothing would happen if the debt ceiling isn't raised. So they say they'll continue to demand either spending cuts or the de-funding of Obamacare in exchange for boosting the government's borrowing authority. But financial experts we talked to say the consequences of not raising the debt ceiling could torpedo the economy.
That's because the debt the US would default on is US treasury notes. And everything from your 401K to international banks and governments buy those treasury notes. They're considered the world's safest investment. Missing an interest payment on them could shake the entire international banking system. But not everyone thinks so.
A new poll finds that 54 percent of republicans think the US could defaultand it wouldn't mean much of anything. A couple of St. Louis financial experts to whom we spoke disagrees.
Since most people's IRA's and 401K's just recovered this year from the losses that started in 2008 another financial hit like that could take people's investments back to 2007 levels again. But as we noted, a large number of voters and their lawmakers deny that anything will happen if we fail to raise the debt ceiling by October 17th.