Joe six pack will not feel a thing. If he has a job, can pay his bills, and food prices aren't going up, a default will not matter to him one bit. Can't say the same thing for federal employees. They will feel the pain. This is a government bubble. The sooner government stop borrowing, the better.
dunno about default,but here is a decent explanation(for joe) of an issue regarding debt ceiling debate(taken from some russian news paper): you walk in your home..it filled with s**t..what your gonna do? unclog a toilet OR raise the ceiling?
Consider this The entire financial & business world relies ( foolishly?) on the borrower of 1st resort ie Treasury debt to back their operations & stow their cash IF the faith in the T debt is shaken or they do default, how do you see the banks, brokers, clearing houses, pension companies etc surviving ? Or the millions of businesses ( employers) that rely on the financial system to survive & operate ? IMHO there will likely be a massive run on the dollar, banks, savings etc which will have to be denied because the money simply is not there, this will result in chaos, riots & more, along with mass unemployment without social (in)security Of course the fed can print its way into oblivion even faster if they choose to - the effects longer term will be devastating - how will citizens react to finding prices for simple goods in the hundreds of thousands of dollars & a never ending race to catch up with runaway inflation? ( no I am not mad look what has happened in so many other countries that chose to `print their way to riches') Either way the `full faith of the us govt' will become even more of a farce than it is now - the farce will be the reality & chaos will ensure (as well as opportunity for a few) As for perhaps half of the poorer / smaller countries in the world that use USD$ as either a backstop or a semi official currency (because the people do not trust their own currency) their citizens will be particularly hard hit & it is not an exaggeration to say that great suffering, revolutions & wars may be caused by the collapse. Will all of the above & more come true ? maybe its best not to find out & for the `elected crooks' (ahem politicians) to get their collective act together & solve the deficits as well as the funding issues As the saying goes never a borrower nor a lender be - there is much wisdom in that. M