Maybe the importance of the Fiscal Cliff thing is lost on you. Maybe you see the problem as something Congress needs to sort out in order to pay "it's" bills. But you may be missing something even closer to home. The coming crisis (no longer just a 'looming' crisis) could end up taking all of your money from you. Here's how.
Student loan debt now exceeds $956 billion, larger than the auto loan debt or the credit card debt for the entire nation. The default rate is climbing. The 90 day default rate recently passed 11%. In 2007 when the housing crisis began the 90 day default rate was 16%. It then got to 21%. If the fiscal cliff issue isn't resolved the student loan defaults will be devastating.
So how does this affect you? Well, your money, where ever you keep it, isn't there. It's out on loan. And if those loans don't get repaid, you can't go get your money. And if you can't go get your money, you can't pay for food, or housing or electricity.
When people begin to sense that they might not be able to get to their money, whether this weeks pay check or a life's savings, then a panic sets in. Checks, debit cards and credit cards are no longer accepted forms of payment. People will demand cash, because they can't get any of their own.
Prices will skyrocket. It will take hundreds of dollars to purchase what used to be available for pocket change.
The banks will close their doors. The federal government will be called upon to print more money to help failing banks. But the money the print will be worthless, other countries will stop taking it in payment and things will get very ugly very fast.
If there is going to be a run on banks, you ought to consider when you are going down to get your money out, how you are going to pay for things in the future and what you can do to prepare now.
Is it going to happen? I don't know.
But if it did, what would you do, and when?