Transcripts

"Two Ways to Play"-Kevin Depew of Minyanville

SUSIE GHARIB: Moody's has upheld its triple A credit rating on the United States. But with government debt soaring to record levels, tonight's "Two Ways to Play" debates the future of America's credit rating. Here's Kevin Depew of Minyanville and Minyanville's Kevin Depew.

KEVIN DEPEW, EXECUTIVE EDITOR, MINYANVILLE.COM: Increasingly some are worried about the potential for a downgrade of the U.S. government's triple A credit rating. Why does it matter? Because a downgrade would increase our borrowing costs and reflect an increased risk for sovereign default. As the world's largest economy, with a debt roughly 70 percent of GDP, an increase in our borrowing costs at the same time we're busy trying to print our way out of a credit crisis would be disastrous. This would create not just the potential for rampant inflation, but hyperinflation and, ultimately, a default on our debt. Look at you, Mr. Negative. You're beginning to sound like me. But let's consider a little history. Sovereign defaults have been occurring for centuries. The obvious question is, who in their right mind would lend to a country that defaults on its debt. But consider the other side. Why should more private capital be poured into government waste in the first place? It's precisely this drying up of government access to credit we should embrace. What we want is abundant savings and investment in private enterprises, a lean, austere, low-budget government. A U.S. debt default isn't the problem; its the solution.