
”The two things you’ll never be without: your reputation and your credit rating. You can destroy them both in an instant and spend the rest of your life trying to get them back."
— Larry Winget
The company known as “Fitch Ratings” was founded on Christmas Eve 1914 as The Fitch Publishing company.
In 1914, the European Continent was already at war, mostly because of centuries old grudges held between the nascent German nation and France. Each wanted their own colonial empires. Each were losing out to the British navy and the yet upstarts from the new world, the United States.
The United States were once thought of as a collective of trading “states” that could help each other out if they worked together.
In 1914, there was no need for the United States to get in the military conflagration across the pond, so they stayed out of the war until 1918.
What they were able to do, in the meantime, is sell stuff to the various combatants. In the 19-teens and 1920s, the United States got rich selling everything from munitions and grain, to fabric and oil to the rest of European countries who were getting along poorly.
Fitch was a publishing company, much like our own, that got started rating the quality of investments, among them bonds. Over time, their ratings began to hold weight among traders making decisions about sums of money they’d be responsible for, ultimately.
Last week, Fitch—which is still a going concern more than a hundred years later—downgraded the credit rating of the U.S. government. The announcement upset people like Janet Yellen, who is currently the Secretary of Treasury of the US.
It made some other folks happy.
Fitch cited political discord among the reasons for downgrading US debt from AAA to AA+. By their published opinion if you can’t figure out how to get along politically, it’s not likely you can finance your bills.
Bill Ackman, an iconoclast hedge fund manager, agreed. He bet that the Fed and Treasury would not be able to wrangle inflation or manage the outsized United States debt without forever raising interest rates.
Bonds are not easy to understand. For most people, me included, the inverse relationship between bond prices and the interest paid on that debt is a mind pretzel.
“It’s really not that difficult,” our guest this week on the Wiggin Sessions, Shah Galani, explained in a pre-interview discussion. When the government needs to raise money, they increase interest rates to incentivize buyers. The price to buy the bond also goes down. So you pay less… to get a higher return later.
Ackman just bet a small bundle that the Fed will never be able to get interest rates back to the elusive 2%… and was willing to pay a smaller price to make the bet over the next 30-years.
Of course, if his bet doesn’t work out, he can always sell the bonds to another, greater, fool.
Regards,
Addison Wiggin,
The Wiggin Sessions
P.S. We’re calling this summer The Great Complacency Tour of 2023 because everywhere we go big moves are happening in the market… but people are more and more complacent.
We’ve been to a bunch of American cities this year: Austin, Indianapolis, Memphis, Miami, Pittsburgh, New York, Long Island, Warner NH. Each place we go people are more and more happy. What gives?
Forget about mass shootings. Opioid addiction. Inflation or gas prices. Forget about mounting national debt or rising interest rates. Forget about the “news” as it gets reported. We’re good for now, right?

Addison Wiggin
Addison Wiggin is an American writer, publisher, and filmmaker. He was the founder of Agora Financial and publisher for 18 years. An acclaimed New York Times best-selling author, his books include: Financial Reckoning Day, Empire of Debt, The Demise of the Dollar, and The Little Book of the Shrinking Dollar. Addison is also the writer and executive producer of the documentary I.O.U.S.A., an exposé on the national debt, shortlisted for an Academy Award in 2008. He lives in Baltimore, Maryland with his family. Addison started his latest project, The Wiggin Sessions, powered by Consilience Financial, in March 2020. He films from a homegrown studio in his basement.