The day the US defaulted on its debt was the day the world changed forever. It was May 19th, 2023, and the deadline for raising the debt ceiling had passed without a deal in Congress. The Treasury Department had exhausted all its extraordinary measures and could no longer pay its bills. The credit rating agencies had downgraded the US to junk status, and the global markets had panicked. The dollar plunged, interest rates soared, and stocks crashed. The US economy entered a deep recession, and millions of Americans lost their jobs, homes, and savings.
But the worst was yet to come. China, the largest foreign holder of US debt, decided to use its leverage to demand concessions from Washington. It threatened to dump its treasury bonds on the open market, triggering a financial meltdown. It also demanded that the US withdraw its military presence from the Asia-Pacific region, and recognize Taiwan as part of China. The US refused to comply, and tensions escalated into a cold war.
Meanwhile, other countries took advantage of the US weakness to pursue their own interests. Russia invaded Ukraine and annexed Crimea, while Iran resumed its nuclear program and threatened Israel. North Korea launched a missile test that flew over Japan, and Venezuela seized control of the Panama Canal. The UN Security Council was paralyzed by vetoes and disagreements, and the world order that had been maintained by the US for decades collapsed.
The US tried to recover from its crisis, but it was too late. Its allies had lost faith in its leadership and reliability, and its enemies had gained confidence and aggression. Its influence and power had diminished, and its reputation and prestige had tarnished. It was no longer the sole superpower of the world, but just another struggling nation among many.
The day the US defaulted on its debt was the day the world changed forever. And it was not for the better.
