Tag Archives: inflation finance

Can the US Go Bankrupt? Yes, of course it can

A few days ago, the rating agency Standard & Poor’s changed its rating of US government bonds from the usual (highest possible) AAA to a similar one, but with a “negative outlook warning”. This caused havoc around the blogosphere and in policy circles. Some claimed that this was an untimely private, and politically motivated, action serving to undermine public spending programmes in the US. In any case, the market didn’t take much notice, as the interest on government bonds moved little. “Poor Standards” as Paul Krugman called it. He may be right. After all, S&P did funny ratings in the past (remember house-backed securities pre 2007?). And, by the way, … Continue reading

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