Financial Collapse?

There have been lot's of scary words thrown around in the past few weeks as this financial fallout continues to come to a head. One of the scary words is "collapse". I've had some people ask me what that even means and what it would look like. In a really small nutshell, here's how it would work; The US dollar would start to lose value as investors would start to question the US Government's stability and it's ability to repay all of it's obligations. Once they lose confidence in the U.S., they would demand more interest in any transaction where they were buying Government bonds...because of the increased risk. That cycle would continue to snowball just like a person with a bad credit rating has problems getting houses, cars, etc...

Again, since misery loves company, it would be certain that other countries would start to spiral down with us because they have so much invested in our economy. It could certainly be a global event. In all the ensuing financial chaos and scarce resources, it's an almost certainty that armed conflict would escalate.

You can read a Bloomberg article here on the falling dollar; http://www.bloomberg.com/apps/news?pid=20601087&sid=aWEV62hBpIQ4&refer=home