How Government Instability Undermines the U.S. Economy
Prolonged turmoil could damage investors' faith in the safest asset in the world.
The unthinkable has become the merely unlikely.
Photographer: Bloomberg
The U.S. has had an attack on its Capitol, and may see more protests in the weeks to come. This upheaval is doing more than raising tempers and causing anxiety; it's threatening the financial and economic foundations of the country. If political instability causes Treasury bonds to become riskier assets, it could undermine the entire banking system -- and by extension, every American company and the jobs of the people they employ.
There's been some academic debate about whether the events of Jan. 6th -- when supporters of outgoing President Donald Trump stormed the Capitol Building, murdered one policeman, put Congress to flight and attempted to stop the counting of the electoral votes from November’s election -- should officially count as a coup. Some believe it does. The Polity Project, which measures the characteristics of national governments, has already downgraded the U.S. from a democracy to an “anocracy” -- a hybrid of democracy and dictatorship.