If the U.S. loses its AAA credit rating, it (technically) means the govt will have to pay higher rates in order to borrow (sell Treasuries). It means the U.S. has a higher risk of default than another country that is AAA-rated.
We’ve been hearing rumors about this for awhile, so nobody really knows if anything really comes to pass. We’ve pretty much convinced many other countries (most who matter) to do the same thing via quantitative and qualitative easing. There seems to be some resistance now to go further, but again, it remains to be seen what happens outside of the rhetoric.
Disclosure: long Swiss Treasuries (who are basically in the same boat)
