6 ms·

I'm not sure how any other vehicle may have better rating than U.S. If U.S. somehow fails, then it's all at large.

roenxi 3y ago
The US has proven quite willing to just take assets off Russians for political reasons. Fitch probably isn't going to say it outright; but if a country has a record of saying "nah, I'm taking it back" about someone else's assets then it seems reasonable to rate them below an AAA. Even if the US doesn't fail, it isn't really credible to claim its debt is an AAA security. For a lot of participants in the market there is an obvious risk that the US will take their money and not return it.
- htfu 3y ago
  Unfortunately only freezing. In a more reasonable world yes they'd be taken and used for restoration (you break it you buy it), nothing political about it either. Nor does it have anything whatsoever to do with this.
  - willcipriano 3y ago
    I agree the assets of defence contractors, politicians who voted in favor of war and their families in the United States should all be nationalized and used to repair the smoking crater left in the middle east. Oh you weren't talking about those war crimes? Only the one's the media tells you to be mad at? Rachel Maddow would know what is justified in war, given she was just the keynote speaker at a weapons manufacturers conference.
  - thriftwy 3y ago
    Imagine you are buying some coal from a dude and that dude settles with getting an IOU note from you. Later on, you decide you no longer have to honor that IOU debt because you no longer like what that dude does with other people. You've also put that coal to a good use. A win-win for you.
jrockway 3y ago
I think people are right to be nervous about the brinkmanship around the debt ceiling. We pretend to be about to default every couple years, then at the last possible second, we say "haha, just kidding". It's possible that one day, the "haha just kidding" part might not happen. That said, I'm not sure that this is any more dangerous than any other kind of debt. In the past, people considered US government debt to be equal in safety to a savings account. It is definitely a little more risky than that these days. The FDIC has never said "just kidding about that insurance!"
- wongarsu 3y ago
  So far we've always had the backup plan of just minting a billion dollar coin. Once that option is taken away at some point this whole thing becomes a lot more serious, and I would expect an accelerated move away from US government bonds and the USD (from people outside the US). Of course actually minting that coin might also damage trust in the USD.
  - contravariant 3y ago
    This was never about the U.S. not having enough money, with the USD as the currency for oil it's never going to be too hard for the U.S. to get enough USD together one way or another. The problem is the U.S. simply being unwilling to pay interest. Which you cannot solve by printing more money.
    - Guthur 3y ago
      It essentially has infinite dollars, it just hasn't told you about them yet.
    - wongarsu 3y ago
      It's about the US playing silly political games on a regular schedule. Which you can solve by minting coins, because minting coins generates income without needing approval from congress. https://en.wikipedia.org/wiki/Trillion-dollar_coin https://en.wikipedia.org/wiki/Trillion-dollar_coin
fabian2k 3y ago
The point here is that the country and government don't have to actually fail here to fail paying the debts. The debt ceiling rules and the behaviour of the Republican party make it a plausible outcome that the US decides to simply not pay their debts at some point in the future.
- jakeinspace 3y ago
  Except that the federal government is likely conditionally required to pay its debts.
  - actionfromafar 3y ago
    Eh, how? The fed government opened slightly the door to “we can but won’t” territory.
- willcipriano 3y ago
  Demographics are going to prevent paying back the debt eventually. The line will stop going up and our kids aren't going to be willing to pay for our wars.
legulere 3y ago
After second world war the US economy represented a majority of the world economy. This hasn't been true anymore for a while. To have a better rating than the US-Dollar you simply need to have a lower risk of default and not be over-dependent on the US-Dollar.

The US has proven quite willing to just take assets off Russians for political reasons. Fitch probably isn't going to say it outright; but if a country has a record of saying "nah, I'm taking it back" about someone else's assets then it seems reasonable to rate them below an AAA. Even if the US doesn't fail, it isn't really credible to claim its debt is an AAA security. For a lot of participants in the market there is an obvious risk that the US will take their money and not return it.

htfu 3y ago
Unfortunately only freezing. In a more reasonable world yes they'd be taken and used for restoration (you break it you buy it), nothing political about it either. Nor does it have anything whatsoever to do with this.
- willcipriano 3y ago
  I agree the assets of defence contractors, politicians who voted in favor of war and their families in the United States should all be nationalized and used to repair the smoking crater left in the middle east. Oh you weren't talking about those war crimes? Only the one's the media tells you to be mad at? Rachel Maddow would know what is justified in war, given she was just the keynote speaker at a weapons manufacturers conference.
- thriftwy 3y ago
  Imagine you are buying some coal from a dude and that dude settles with getting an IOU note from you. Later on, you decide you no longer have to honor that IOU debt because you no longer like what that dude does with other people. You've also put that coal to a good use. A win-win for you.

jrockway 3y ago

I think people are right to be nervous about the brinkmanship around the debt ceiling. We pretend to be about to default every couple years, then at the last possible second, we say "haha, just kidding". It's possible that one day, the "haha just kidding" part might not happen. That said, I'm not sure that this is any more dangerous than any other kind of debt. In the past, people considered US government debt to be equal in safety to a savings account. It is definitely a little more risky than that these days. The FDIC has never said "just kidding about that insurance!"

wongarsu 3y ago
So far we've always had the backup plan of just minting a billion dollar coin. Once that option is taken away at some point this whole thing becomes a lot more serious, and I would expect an accelerated move away from US government bonds and the USD (from people outside the US). Of course actually minting that coin might also damage trust in the USD.
- contravariant 3y ago
  This was never about the U.S. not having enough money, with the USD as the currency for oil it's never going to be too hard for the U.S. to get enough USD together one way or another. The problem is the U.S. simply being unwilling to pay interest. Which you cannot solve by printing more money.
  - Guthur 3y ago
    It essentially has infinite dollars, it just hasn't told you about them yet.
  - wongarsu 3y ago
    It's about the US playing silly political games on a regular schedule. Which you can solve by minting coins, because minting coins generates income without needing approval from congress. https://en.wikipedia.org/wiki/Trillion-dollar_coin https://en.wikipedia.org/wiki/Trillion-dollar_coin

fabian2k 3y ago

The point here is that the country and government don't have to actually fail here to fail paying the debts. The debt ceiling rules and the behaviour of the Republican party make it a plausible outcome that the US decides to simply not pay their debts at some point in the future.

jakeinspace 3y ago
Except that the federal government is likely conditionally required to pay its debts.
- actionfromafar 3y ago
  Eh, how? The fed government opened slightly the door to “we can but won’t” territory.
willcipriano 3y ago
Demographics are going to prevent paying back the debt eventually. The line will stop going up and our kids aren't going to be willing to pay for our wars.

legulere 3y ago

After second world war the US economy represented a majority of the world economy. This hasn't been true anymore for a while. To have a better rating than the US-Dollar you simply need to have a lower risk of default and not be over-dependent on the US-Dollar.