The United States has never defaulted on its debt. As a result, statements such as this are familiar to investors around the world: “Bonds issued by the U.S. Treasury are backed by the full faith and credit of the U.S. government and therefore considered to have no credit risk.”
The consequences of a government default are harsh. Suddenly the safest investment is precarious. Where would you put your money? Where would pension fund managers put money?
Mortgage rates generally rise and fall along with yields on Treasury securities. What will happen with higher mortgage rates? Interest rates, including the interest rate on the U.S. debt and the interest rate you pay, will increase.
Even so, some U.S. representatives are suggesting that our government voluntarily discount the full faith and credit of the government. They are creating a crisis where no crisis exists, without considering the cost.
Time is short. The House needs to raise the debt ceiling now.