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Should We Be Worried About a U.S. Debt Default?

While the stock markets so far have reacted mildly to the government shutdown, the looming Washington fight over the need to raise the federal debt ceiling could lead to a U.S. debt default.

And that, everyone agrees, would trigger a much more pronounced reaction from Wall Street.

Unless Congress raises the U.S. debt ceiling by Oct. 17, the country will be unable to borrow any more money to pay its bills – including the interest on the $16.7 trillion it's already borrowed.

That would result in a U.S. debt default that would torpedo the nation's credit rating and send markets tumbling.

The question investors are trying to answer is whether Congress is so dysfunctional at this point that it actually allow something as destructive as a U.S. debt default to happen.

Money Morning Capital Wave Strategist Shah Gilani went on the FOX Business program "Varney & Co." on Tuesday to offer his view on how the debt ceiling fight will play out, and what investors should keep an eye on.


Note: Nothing goes up forever. Not the Federal Reserve's balance sheet, not debt levels, and not stock markets… even when there isn't a government shutdown or U.S. debt default looming. Here Shah Gilani tells you how to prepare for the eventual correction (or possible crash), and – more importantly – how to make money from it…

Join the conversation. Click here to jump to comments…

  1. H Craig Bradley | October 2, 2013


    Quite a mouthfull Shah. " Federal Government will NEVER Default". You are correct the politicans would never intentionally commit political suicide by defaulting. Sure, the FED will keep printing forever. Question is, will the global debt markets accept our shenanigans forever and have full confidence forever that we are always "good for it", as well? If buyers demand higher rates, interest payments balloon. Then govt. promises are broken ( Cuts to EBT, MEDICARE, FED. PENSIONS)

  2. yngso | October 3, 2013

    The tragedy is that a small minority is wagging the dog, keeping the whole world hostage.

  3. DW | October 4, 2013

    Lol! Never say Never!!!! This guy is a fool, the US IS going to default, it's the whole plan! Wake up!

    • MD | October 5, 2013

      So you figure this is Obama's plan to Marshall Law? Do you think this country would stand for that?

    • Ron | October 5, 2013

      DW, It indeed is the plan. People will never wake up or believe such a thing though. And when people wake up one morning living in chains without freedom and liberty, they will ask, "why did someone not tell me what was going on"?

  4. H. Craig Bradley | October 16, 2013


    If Americans want to freely choose to give-up the freedom and lifestyles they inherited from their parents and previous generations of Americans, then it is their right to so decide. If they don't believe their rights are worth defending, they are free to give them up and surrender to whatever powers that be decide to do to them. If people don't care, then we really don't appreciate what we started out with. We thus act ungrateful. Poor attitudes lead to poor policies which must end with poor results and poor people who chose to become stupid.

  5. Brad M | October 17, 2013

    The surest way to bring down a nation is to destroy its currency. The most enfamous example of this is the Weimar Republic ( Germany between WWI and the Nazi party ). The hyperinflation left the population desperate enough to follow Hitler. I am not arrogant nor naive enough to believe that the US population would not follow a similar character if it had to do without its stuff and comforts, and with modern technology and the surveillance state admittedly in place, it would far easier for the evil to crush any internal opposition quickly. Another question this begs… whom in the world or even on our own soil would the mightiest military machine ever assembled be turned loose on… convinced by intentionally created events and crisis that the actions were necessary? Desperate people do and allow extreme things.I once thought this just sounded like paranoid talk or conspiracy theory, but given the events of history along with the current climate of events and economics, I am not sure it isnt actually the grand design of a few very wealthy, powerful..and evil individuals. They have certainly done it before. Will they soon do it to America too?

  6. H. Craig Bradley | October 27, 2013


    Americans have always harbored "conspiracy theories" and bogymen to explain away or blame for their own poor elective choices and national policies. We chose to build-up debt and enjoy today at the expense of the future. Like Wimpy, we preferred a hamburger today that we borrowed from tomorrow to eat. We often get what we ask for and some might add, also what we deserve.

    In any event, a future collapse of the U.S. Dollar has been long in coming and may still be a ways off, as yet. Many have been predicting our demise for decades. Same with the current bull market in stocks. Market sentiment, mood (swings), and international capital flows are what drive stocks in a global marketplace. If the mood were to suddenly turn negative, stocks would go down. Nobody can predict people's collective emotions except some stock market historians say they are cyclical.

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