- The downgrade of the U.S. Treasuries by S&P is just silly in my opinion. The rating agency's job is historically to opine on the payback ability of various entities, and one thing seems fairly clear to me that the United States certainly has the ability to pay back its debts. Obviously, Treasury Department can just run the printing press if it comes to that.
- So there's no reason whatsoever to downgrade the U.S. Treasury. What S&P has really done I think is to opine on the value of the dollars on which you're paid back, which isn't really the firm's job. Its job isn't to make forecast about currencies or commodities. It's job is to talk about the probability of payback, and the probability of payback is 100%.
- So what you've really had is downgrade of the dollar. You could also say that S&P thinks there might be a voluntary default, based upon politicians' attitudes as revealed in the shenanigans with the debt ceiling, but I think that that's just incredibly unlikely.
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