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ll have cut the underpinnings from beneath the American dollar.
"And it won't stop there. What will happen to the companies that build the dynamos and the boilers and the atomic plants for the power companies? What will happen to the copper industry when the need for millions of miles of copper wire vanishes? They will all suffer tremendous setbacks, throwing tens of thousands more out of work and lowering the value of their stock drastically.
"The banks, then, will find their investments suddenly worth only a fraction of their former value. They'll fail wholesale. And you can see what that will do to the Federal Deposit Insurance Corporation and other insurance companies."
Sam Bending nodded slowly. He could see that. Insurance companies base their business on the prediction that a certain event--death, accident, or the failure of a bank--will happen to a certain percentage of their covered clients, and they adjust their rates accordingly. But something that would change a five-percent-failure rate to a fifty-percent-failure rate would break the company.
And the unemployment rate would go up even higher. And Sam thought of something the Secretary hadn't even mentioned. State and Federal Unemployment Insurance. What would that drain do to the treasuries of the various governments involved?
Sam Bending felt as if the thing were snowballing on him. Where would the State and Federal Governments get that money? Taxes? Don't be silly. How can you collect sales taxes when sales are dropping off because of unemployment? How can you get income taxes from depleted incomes? How can you charge luxury taxes when no one is buying luxuries?
Certainly essentials like food, rent, and clothing couldn't be taxed. People would buy as cheaply as possible, which would force down prices. Which would--
* * * * *
"Where would it go from there?" Sam asked Condley in a shaken voice.
Condley glanced over at the Russian. "I believe Dr. Artomonov can answer that one for you."