The Role of US Debt in the Debt Ceiling Crisis

A downgrade on the US debt would likely have rating implications. Treasuries remain the highest rated asset in the US and given rising policy and economic uncertainty would likely rally as risk aversion increases. This really this is the exorbitant privilege that people buy into your assets at the moment when you can't service them. It's basically an intolerable idea that America because it wouldn't be a default like Sri Lanka. The Democrats learned from the previous two showdowns in 2011 and 2013 that it doesn't hurt them to take the Republicans to the wire on this.