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There have been many reactions to S & Ps action in downgrading the credit rating of the US, Apart from the widespread annoyance and repudiation of S & P and its procedures, there are some who are saying thatit won't have much effect on interest rates. Others even saying that it is a “non-event,” and still others saying that S & P should be investigated and prosecuted on a number of grounds. However, I found two views of the “non-event” particularly interesting.

The first was Warren Buffet's quoted by Fox Business news:

Berkshire Hathaway Chairman and CEO Warren Buffett told the FOX Business Network that S&P's downgrade of the United States' triple-A credit rating "doesn't make sense."

"I don't get it," Buffett told FBN late Friday night. In fact, Buffett reaffirmed his belief in the quality of the United States' credit telling FBN, "In Omaha, the U.S. is still triple A. In fact, if there were a quadruple-A rating, I'd give the U.S. that.”

Buffett also said:

"Think about it. The U.S., to my knowledge owes no money in currency other than the U.S. dollar, which it can print at will. Now if you're talking about inflation, that's a different question."

And so, now we know that Warren Buffett gets a fundamental premise of MMT!

He knows that the US cannot become insolvent because it can make USD at will and it owes nothing that is not denominated in USD!

We can only hope that he'll clue in his friend Barack Obama that the US is NOT running out of money. Perhaps Mr. Buffett even knows about Proof Platinum Coin Seigniorage (PPCS) and he can tell his friend Barack that using it would be a good way to give S & P a sharp stick in the eye.

The other reaction was one to my post on S & P tugging Superman's cape. The commenter asserted that, considering the US Government's domination by an increasingly powerful oligarchy, “the US Government is not Superman.” This squares with views being expressed by Yves Smith and others that this downgrade is about a power struggle. People who write about this struggle characterize it differently.

I think it is a power struggle between sovereign nation states and globalizing international elites whose loyalties are to the emerging new international feudalism in which corporations and enormously wealthy individuals wield the only real power. Some write as if they think that nation states are already and irrevocably subordinate to international elites. But I think that is not yet true.

The forces of nationalism are not yet spent, and will still be used against the international elites when the reality of their growing power and its negative impacts on working people are both fully recognized. People still need nation states for physical protection. People without a favored position in the emerging plutocracy still owe their primary loyalties to their nations, and I don't think they will long accept the subordination of their national Governments and institutions to foreign powers, whether those are other nations or international financial interests. At the moment, the influence of globalizing elite institutions is very great and very real; but they still exist and function on the sufferance of nation states and their internal politics, however parasitical they may be.

Even with all its faults and the mess being made by the special interests and the parties, the US is still Superman if we can free ourselves from the constraints imposed by various Congresses in the past, and from the financial lilliputians.

1. As I say in this piece, and Marshall Auerback says in this one, the US (the Fed and the Treasury) can control interest rates contrary to the desires of the bond markets and the vigilantes. There is no realistic prospect that benchmark interest rates will go up unless the Government wants them to.

2. The US can also de-certify the ratings agencies and prosecute rating agency executives for fraud and other violations. I think they'd be well-advised to do so, if only to show S & P who's boss. And

3. The President, finally, can use very high value PPCS and kill the “austerity” trope of the international elites for good.

So, forgive me my optimism, I still think that's Superman!

(Cross-posted from Correntewire.

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Comment Preferences

  •  This is all a charade (0+ / 0-)

    to cut entitlements. By any means necessary.

    "George RR Martin is not your bitch" ~~ Neil Gaiman

    by tardis10 on Mon Aug 08, 2011 at 07:47:25 AM PDT

  •  I think you'll find that... (1+ / 0-)
    Recommended by:

    ...your own opinion is likely just as valid as whatever "others say."

    I didn't care for math, but when I first understood the concept of finding the slope of a curve at a point, I wanted to grab the first girl I saw and kiss her with wild abandon, just like in that WW II photo.

    by dov12348 on Mon Aug 08, 2011 at 07:50:21 AM PDT

  •  Why are you constantly pushing this coin concept? (1+ / 0-)
    Recommended by:

    Just about everything you post about brings the reader back to this coin you love so much. Why?

    "Gentlemen, you can't fight in here! This is the War Room." - President Merkin Muffley

    by Farkletoo on Mon Aug 08, 2011 at 07:54:01 AM PDT

    •  Pretty simple (1+ / 0-)
      Recommended by:

      I'm a serious progressive and I think very high-value PPCS is the only game-changer in town that doesn't have to go through a Congress held in thrall by the Republican House, and that can be implemented by the President alone.

      I explained that here, here, and here.

      Since I think that a game-change is the only thing that will prevent the US from sinking into near 3rd world status before 2016, I'm going to keep emphasizing it until it catches in the higher reaches of the blogosphere. You may have noticed that the general idea of PPCS is now widely recognized. I marketed the idea for 6 months trying to get that done. Finally, with some help from the inside and some luck, about a week before the debt deal it started going viral.

      I'm going to the same thing with this idea. keep pushing until i break through the screens.

  •  one of the major lies (2+ / 0-)
    Recommended by:
    psyched, ItsaMathJoke

    of the right, that it is patriotic, supports the USA.  Maybe grandpa in the tea party does, ie, the USA of white male domination he remembers, but not the rest of the right.

    This is the battle for international power between governments and NGO's.  For years the right in the USA has spewed conspiracy theories and created right wing hysteria over world government and loss of sovereignty to people, while trying to establish international hegemony of NGO's, multinational corporations and trade agencies.  The only power that can counter it,  internationally cooperative governments,  have been demonized in the US.   All hail our feudal corporate overlords.

  •  Thanks, Letsgetitdone! (0+ / 0-)

    Great diary--compact, punchy and accurate.

    For the first time in human history, we possess both the means for destroying all life on Earth or realizing a paradise on the planet--Michio Kaku.

    by psyched on Mon Aug 08, 2011 at 01:08:57 PM PDT

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