PEORIA MAGAZINE July 2023

ECON CORNER

Dr. Charles Kahn Professor emeritus of

W elcome back to Peoria Magazine’s Econ Corner, a recurring feature in which we pose questions to experts about various economic issues and how they affect our lives and careers here in central Illinois. Doing this month’s Q&A is Dr. Charles Kahn, professor emeritus of finance at the Gies College of Business,University of Illinois Urbana-Champaign. He previously consulted for the Federal Reserve Bank of Chicago (2009-2017) and the Bank of England (2004-2006). Peoria Magazine (PM): Ultimately, Congress reached an accommodation on raising the debt ceiling and President Biden signed it, but not until taking things down to the wire again. In any case, many Americans don’t seem to take default on the debt seriously, including a former president who recently said, “Well, you might as well do it now, because you’ll do it later.” Can you discuss the consequences of default, how serious it is, and how everyday Americans would notice the effect on their lives? Charles Kahn (CK): A real default on United States treasury debt, with the government repudiating any repayment, would be an unmitigated disaster. To see what is involved, let’s consider an analogy: Think of what would happen in this country if, because of some disruption, people suddenly couldn’t pay for things. The chaos would be enormous as purchases and sales suddenly ceased. INTERVIEW BY MIKE BAILEY ILLUSTRATION BY SCOTT SHEPLER finance at the Gies College of Business,University of Illinois Urbana-Champaign

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