Is it economically possible for the U.S. financial system to collapse?
Answer by J.C. Hewitt:
That's entirely up to how much pain dollar-holders are willing to endure and how much foreigners love America.
If the former two variables are infinitely large, then the US financial system – which is the global financial system, it goes beyond our borders – will never collapse.
If the pain becomes too much, corporate leaders and the members of the media will feel extreme pressure to not provide the crucial propaganda support that the system requires to function smoothly.
It really depends on what you mean by collapse, though.
As long as the banks have electricity, you'll be able to access your money. The Fed can produce money in infinite amounts. Transactions are still going to go through, no matter what the quantities involved are.
Even if Goldman Sachs goes bankrupt seven times before Thursday, you can rest assured that they will be bailed out every time. It would be embarrassing, but after all, it's all just paper with president pictures on it.
Right now, there are no real competitors to the US system, in large part because competing systems are forcibly suppressed. As long as the leaders have the will to power, the US financial system will remain crucial to international trade.