Those, who do not understand the differences between Monetary Sovereignty and monetary non-sovereignty, do not understand economics.
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Just when you thought Standard & Poor’s couldn’t get more disfunctional, they outdo themselves. You remember S&P, don’t you? They are the people who became famous for giving AAA ratings to absolute junk, helping to cost investors hundreds of millions of dollars.
Now, showing neither shame nor remorse, they have downgraded United States debt from AAA to AA. In S&P’s opinion, this puts the federal government’s credit at a lower level than that of such companies as:
US Bancorp
XTO Energy
State Street Corp.
Citigroup
Bank of America
GE Capital
Wells Fargo
JP Morgan Chase
Goldman Sachs
Keybank
John Deere
West Corp.
GMAC
KFW International
Johnson & Johnson
Microsoft
Long after these companies — and S&P — have disappeared, the U.S. government still will be here, paying its bills, with no difficulty whatsoever. The Monetary Sovereignty of the United States will overcome the economic ignorance of Congress and the President.
But, if you feel safer buying the bonds of these firms than buying United States T-bonds, T- notes and T-bills, I have a bridge in Brooklyn I would like to sell you. And if you believe anything S&P says in the future, I have two bridges to sell you.
S&P didn’t downgrade the U.S. It downgraded itself. But don’t worry. This will have zero effect on our economy. It’s a publicity ploy by S&P.
Rodger Malcolm Mitchell
http://www.rodgermitchell.com
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No nation can tax itself into prosperity, nor grow without money growth. Monetary Sovereignty: Cutting federal deficits to grow the economy is like applying leeches to cure anemia. The key equation in economics: Federal Deficits – Net Imports = Net Private Savings
MONETARY SOVEREIGNTY
#Monetary Sovereignty - Mitchell 
Further to demonstrate the idiocy of S&P’s machinations, Great Britain, Canada, Germany and France (!) had AAA credit ratings.
Rodger Malcolm Mitchell
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This is a great day. This downgrade will advance the cause of MMT/Monetary Sovereignty. I believe sites like pragcap.com are planting so many seeds of thought in the investment community, and now this big news event is like a big rain storm that will grow “our” seeds. Hell, I even heard Mark Cuban make an MMT sounding comment on Bill Maher show the other night. I’m hearing more and more of it outside of these blogs. The Tea party types will hold on to their version of truth until they die, but the smart money will win the day and influence power.
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From your lips to God’s ears.
Rodger Malcolm Mitchell
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I thought I read somewhere that these rating agencies are paid to make rating determinations on debt–by the same people they are rating. Is there any truth to that? I don’t get why there are 3 different ratings agencies. So, one downgrades us an the other 2 don’t. Obviously it means nothing but what advantage does S & P have doing this? Getting their name in the papers?
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Sidnee,
Yes, to both your questions.
Rodger Malcolm Mitchell
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Aren’t these the same corrupt agencies that handed out AAA ratings to loans made out of heaping piles of dung? And when called to testify, trotted out the legal stable to echo the following disclaimer, “these ratings were merely our opinions”.
These agencies provide opinion editorial journalism with about the same level of credibility as The National Enquirer.
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A couple of thoughts.
1) The AAA rating is for sovereign debt, so to compare that debt to corporate debts is a bit misleading. The rating would only be comparable to other sovereign debts (like Germany and Great Britain).
2) I find the rating downgrade to be in line with what you have written about. That the debts of the nation are always payable by the government unless Congress messes it up. The S&P rating is negative because they’re worried that Congress will fail to allow the funding of the debt due to austerity and gridlock. (Though they do mention revenue increases as a solution.)
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Credit ratings rank the likelihood of failure to pay. If the U.S. were to fail to pay its creditors, what do you think the debts of the AAA companies will be worth? They have to pay with dollars.
Rodger Malcolm Mitchell
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There are politicians in Washington who are saying we probably should not pay. It’s not the ability to pay, it’s the willingness to that is worrisome.
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