Whenever Congress and the president lock horns over a vital national interest, it is easy to declare "a pox on both their houses" and reflect fondly on those nonexistent days when government worked brilliantly. This time though, the public mood is a little different. Self-defined libertarians, pseudo-anarchists, Tea Partiers and other formerly fringe groups have come into national prominence by openly questioning the federal government's scope and role in America.
As a thought exercise, then, consider what would happen if there was no federal government anymore. For purposes of this experiment, assume that one day government just disappears - the people still exist and the infrastructure is there, but the laws, rules, systems and policies disappear. Admittedly it is an outlandish scenario, but what would life in the United States look like? (For more read Why You Don't Want A Government Shutdown.)
The Immediate Aftermath
If America woke up to no federal government, there would be absolute chaos in the financial markets. U.S. federal debt is the largest single investment instrument in the market, and the disappearance of a federal government would have everyone scrambling to figure out who, if anybody, would honor that debt. Moreover, since each and every U.S. dollar is essentially a debt instrument backed by the "full faith and credit of the U.S. government", what would that be worth (and also, of the billions of dollars of reserves held around the world in U.S. dollars) with no U.S. government?
To read the full column, please follow this link:
http://financialedge.investopedia.com/financial-edge/0811/What-If-There-Were-No-Government.aspx
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