With everything seemingly going crazy, I’ve been thinking a lot about what would happen should the US debt be downgraded…again. Given our current conditions, that could be the straw that breaks the camel’s back, macroeconomically speaking.
While surfing the interwebs, I found a medium-oldie, but moderately-goodie Op-Ed from Volcker and Peterson -
https://www.nytimes.com/2016/10/22/opinion/ignoring-the-debt-problem.html
"Our current debt may be manageable at a time of unprecedentedly low interest rates. But if we let our debt grow, and interest rates normalize, the interest burden alone would choke our budget and squeeze out other essential spending. There would be no room for the infrastructure programs and the defense rebuilding that today have wide support.
It’s not just federal spending that would be squeezed. The projected rise in federal deficits would compete for funds in our capital markets and far outrun the private sector’s capacity to save, to finance industry and home purchases, and to invest abroad.
Instead, we’d be dependent on foreign investors’ acquiring most of our debt — making the government dependent on the “kindness of strangers” who may not be so kind as the I.O.U.s mount up."
On the off-chance that someone accuses me of hyperventilating, I am. I’m curled up in the fetal position, sitting in a corner, slowly rocking back and forth while sucking my thumb and crying for mama. But it’s Friday…and I’m gonna Shine On!
