Thread by @trygveolson

FAITH OR FEAR THREAD:
Political Risk, the Debt Ceiling Increase, & Political Zero-Sum's Damage to All of Us

With each passing day, October and the next mid-term elections are growing closer.

@reedgalen @stuartpstevens @TheRickWilson @ProjectLincoln @LincolnWatchman @JoeTrippi

So too, as has been the case now for nearly two decades, is the growing danger of zero-sum dysfunctional partisan extremism causing a massive crisis. A self-inflicted wound, through an irresponsible lack of leadership, once again changing our nation.

Sovereign Debt is typically the domain of Wall Street Bankers and Credit Rating Agencies focusing on third world nations. Places we don't think about being similar to us, as the world's largest economy, reserve currency, and the birthplace of democracy.

washingtonpost.com/politics/2021/…

The place where those in nations facing politically driven economic risk go to ensure their investment is safe. The ones buying property here. Investing in American Companies, or even come here to start or build their businesses.

Until 2011 the US Credit Rating had never been lowered from AAA, the highest possible. Through world wars, a depression, political strive, & the financial crisis the full faith and credit of the United States – printed upon our dollars – stood as the best in the world.

The underpinning was stability in our political system. Unlike other places, those elected to protect and defend the Constitution of the United States of America placed matters like repayment of our debts beyond the political whims of a moment.

We were rewarded with lower prices on goods and interest rates than the rest of the world. Yet our world was rewarded too, with knowledge investing in the US economy and US-issued debts would unquestionably be repaid.

They understood the world could count on American's political system and on Americans.

In 2011 this changed. A band of Republicans, elected in the 2010 elections, pushed our nation in relation to faith in its debts to the brink.

A part of our norms which was beyond the political, defending the reputation of our political stability as exemplified via credibility of our debts was called into question. A willingness to hold hostage a pillar of what makes America exceptional over disagreements on policy.

The resulting brinksmanship ultimately led to a technical default, one in which Standard and Poor's lowered are nation's credit rating for the first time in history.

A loud pronouncement of the dysfunction of our political system – as rising partisan extremism through zero-sum tactics – was now adversely affecting our nation's economic-political risk.

For several months now, we have been again standing on the brink. Once again, the extremism in the Republican Party in the willingness to hold the nation's debt and reputation hostage, putting our global economic and political reputation on the line.

Few noticed when Ron Johnson released a letter signed by 46 Republican Senators saying they would no longer vote to raise the debt ceiling.

businessinsider.com/gop-senators-p…

As a traditional conservative, I am concerned about the size & scope of government spending. Yet pronouncements from people saying little during the Trump era's perversion of conservative values (including fiscal responsibility on the revenue side) & democratic ones rings hollow.

Meanwhile, the recklessness of putting at stake faith in the credit of the US out of political opportunity rises to the level of disqualifying.

As late as 2019, @LeaderMcConnell suggesting failure to raise the debt ceiling would be a disaster. Today he says different.

https://twitter.com/nickknudsenus/status/1440677009122680839?s=21

In 2011, @LeaderMcConnell and then Vice President Biden had to be the adults in the room who negotiated a compromise to take the country back from going over the debt ceiling cliff.

politico.com/story/2011/08/…

While some will argue there are ways out of the crisis, for exampling treasury minting a 10 trillion-dollar coin, those are the actions you see in the Banana Republics. They are countries where the political system and levels of political risk are supposedly far higher than ours.

The bottom line is there is far greater Sovereign Risk in the US economy today than people realize. Perhaps some of the Republican side will come to their senses, and the black swan is killed before it appears.

Yet, ask yourself, does this situation give you more confidence in the "full faith and credit of the United States" or more fear of our dysfunctional politics affecting our economy and your pocketbook through higher interest rates

In the end, you can know whether the actions you see today are about growing illiberalism with your answer. If it is fear, you know the direction we are headed as a nation.

Our credit rating and how our economy is perceived worldwide through political stability are a big part of what made America so great. Unfortunately, those clamoring of "Making America Great Again" are the ones damaging it forever no matter how this question is resolved.