Victor Morton at The Washington Times:
“Pres. Obama, show some guts & arrest the CEO of Standard & Poor’s. These criminals brought down the economy in 2008 & now they will do it again,” [Michael] Moore wrote.
Totally. S&P should be giving us gold stars, rainbows, and lollipops. Obama is so cool.
Ben Wolfgang at The Washington Times:
“I believe this is, without question, the tea party downgrade,” Mr. Kerry, Massachusetts Democrat, said on NBC’s “Meet the Press.”
Standard & Poor’s rating agency on Friday dropped the U.S. credit rating from AAA to “AA+, questioning the ability of leaders in Washington to deal seriously with the nation’s debt crisis.
Clearly, the people calling for a balanced budget and those wanting Federal outlays to come somewhere near Federal receipts were the cause of this. The people who just want to borrow more money while keeping our budget out of balance by a factor of almost two had nothing to do with the downgrade.
Let’s not forget that the Tea Party lost the debt debate. They called for massive spending cuts and no more borrowing. We got no real spending cuts and massive borrowing. So, allow me to articulate what Kerry’s statement actually means: The mere assertion of spending cuts and no more borrowing by the Tea Party scared the financial analysts at Standard and Poor’s so much that they downgraded our credit rating in sheer terror of the possibility that we could have an in-balance budget.
Sounds plausible.
Patrick Allen at CNBC:
“The United States can pay any debt it has because we can always print money to do that. So there is zero probability of default” said Greenspan on NBC’s Meet the Press
I’m not sure if Greenspan is just a complete moron, or if he’s just trying to get his name in the news. The cerebral effort put forth by Greenspan in this statement is on par with chewing a stick of gum. We print money. Everyone knows this.
There’s a couple of problems with this strategy, though. Printing money to pay off our debt is pretty similar to just not paying that debt. The larger the debt the more akin it is to just not paying it. For example, we owe China roughly three trillion dollars. Now, I’m not saying we would ever do this, but if we did write them a check for that amount and just print the money to back it, that would inflate our currency in a very significant way. Why? Because you’re essentially creating money that doesn’t represent anything. When you get a paycheck, you produce something for your employer. This contributes to our GDP, which is what our currency is standardized against since we’ve gone off the gold standard.1 So, if you print three trillion dollars, that means there are three trillion more dollars that are backed by the same GDP as before.
Not only would this be a giant middle finger to China, but everyone else who holds US debt. It instantly devalues the asset they hold (our debt). If this was a viable strategy, why would the US borrow money at all? Why not just print whatever we need? The reason is because it doesn’t work. You can’t create value by printing on a piece of paper. Money is just a representation of the hard work and resulting productivity required to create or earn that money. You can’t create something from nothing. Unless you’re God, of course.
Reuters via CNBC:
China bluntly criticized the US on Saturday one day after the superpower’s credit rating was downgraded, saying the “good old days” of borrowing were over.
Oops.