Five ways US default would hit your pocketbook

With the possibility of America defaulting on a debt payment just days away, Americans are hoping for the best but bracing for the worst. Lawmakers are raising alarms. Some investors are scrambling to the safety of gold and foreign currencies. What would a US default mean for the American consumer? Here are five ways it would hit your pocketbook:

- Scott Boyd, Contributor

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A US default would spark a big selloff of the dollar, causing it to lose value against most major currencies. Imports – from toys to gasoline – would cost more. (Photo illustration/Design Pics/Newscom/File)

1. Devalued dollar

There would be a sharp sell-off of the US dollar as investors abandon the currency in favor of a more stable destination. Ordinarily, the euro would be considered a likely candidate. But the eurozone countries are presently mired in their own debt crisis. This helps explain the record price of gold breaking through the $1,600 barrier.

Whether this money finds its way to gold or Canadian dollars or Swiss francs is irrelevant. In the wake of a default, the US dollar would fall against most of the major currencies. Consumers in the United States would pay significantly for almost all their imports – from toys to gasoline.