Happy Idiot, Struggle for the Legal Tender
I'm not a conspiracy theorist but one must concede that our government, on all levels, has been getting more and more business-friendly over the last decade or more. While there are those that will assert that there is a vast and sinister cabal attempting to subvert global progressivism and concentrate wealth in the hands of the wealthiest elite, I understand that the ebb and flow of politics and culture lead to times of great progress and to times of regression. I'm not willing to put motives where none need to be.
Think on this, though. The recent debt squabbles resulted in a deal, however poor a deal it was, to raise the US debt ceiling. While the squabbles did make for an interesting vignette in political brinksmanship, in practical terms, the federal government came nowhere near to either a technical nor a practical default. In its two hundred and thirty-five year history, the US has never defaulted on a public debt. We remain the gold standard (metaphorically speaking) of public securities. No major investor or financial entity believes that US debt is a fundamentally less secure or less reliable financial instrument than it was a month ago. Nothing has functionally changed, except for the letters that S&P ascribe to federal bonds.
The practical results of this, mostly arbitrary, downgrade have been well explained. Any variable debt-instrument that is tied to federal bonds will see its interest rate increase. Your mortgage, car loan, student loans etc, all will end up costing you more because the loan your bank gave you is tied to a loan the bank received from the government which is tied to a loan the government took out from someone else. We all lose.
Or do we?
Who stands to benefit from this? Well, who stands to benefit from any hike in interest rates, the creditor. Secretly, Visa loves it when you miss a payment because they get to charge you more; they make more money and they didn't have to do anything for it.
Hyperbolic talk of market apocalypse aside, the nation's creditors are licking their chops. They're going to pocket as much as one hundred billion dollars a year for doing absolutely nothing. Who's going to pay them those billions? You and I, the working Americans, are going to surrender our tax dollars to the banks, the funds, the foreign governments, the corporations and the affluent individuals that hold the bulk of federal debt. Moreover, those of us who hold personal debt will, through no actions of our own, now be obligated to pay larger sums to the financial institutions that own the deeds to hour homes and the notes on our cars.
We're in the tank for billions of dollars to these institutions and they did absolutely nothing to earn it.
Nothing, unless of course, you count contributing millions of dollars in campaign and soft-money contributions to the very politicians that just engaged in four months of bad faith dog-&-pony show that they knew would tank our credit rating.
Like I said, I'm not a conspiracy theorist, but I'm starting to be more forgiving of those who are.