As the U.S. economy has been normalizing—even moving back to good times—politics has been what I can only call denormalizing. In one more back-to-the-future moment, I am now substantially more worried about political threats to the economy than I am about economic threats.

Newspaper reporters (and bloggers!) are breathing a sigh of relief as the new Congress gets closer. Just as the economic worries are subsiding—at least here in the U.S.—political risks can move back to the front page. As someone who writes a blog post every day, all I can say is thank goodness.

As a citizen, though, I am somewhat (but not yet very) concerned.

After months of debate, millions of dollars spent, and hundreds of thousands of TV ads (and that’s just here in Boston over the past week), Election Day is finally here. When all’s said and done, will it actually make any difference?

Maybe not as much as partisans on both sides would hope, but yes, it will.

Although I touched on a few specific examples the other day, finding a way to express the failure of economics in the face of politics is difficult. There aren’t many smoking guns out there.

Or so I thought. Fred DeBaets, one of our fixed income experts here at Commonwealth, sent around the following chart yesterday morning. It shows that nine countries—all in Europe—have negative interest rates for two-year government debt.

As I wrote last week, the ties between politics and economics are only growing stronger. Let’s look at some current examples of how the two are intersecting—and what this means for investors.

Okay, I admit it. Not only did I get up to check the numbers on the Scotland independence referendum every hour or so last night, but I also spent a few hours earlier in the evening arguing with friends about it. I’ve never been this personally engaged in a foreign political event.

I find it hard to explain why this is, even to myself. I come from a Scots-Irish background, so that may be one reason. Another reason is that I identify with the romantic, hopeful aspirations that drive the independence movement.

For many, the study of economics goes back to the eighteenth-century urtext, The Wealth of Nations, by Scottish economist and philosopher Adam Smith. Notably, Smith and his contemporaries did not study economics, but political economy. At the time, there was no notion that economic behavior could be analyzed separately from its context, the political environment. The different governmental structures made the impact of government on human behavior absolutely impossible to separate—the ties between politics and economics were inextricable. To put it another way, it would be like considering the health of the brain while ignoring that of the heart.

Summer is usually a quiet time on the economic front. This year, we’ve had more news than expected—Russia and Ukraine, Iraq and ISIS, Israel and Gaza—but the general mood has been one of torpor, at least here in the U.S. Economic news has been mixed but generally positive, politics has stayed off the front pages, and the headlines have focused more on the summer than the fall.

As we enter August, though, it’s time to start thinking about issues that will come back into focus when everyone returns from the beach. 

A longstanding demand of much of the political class has been for the government to stop interfering in the economy.

The latest example of this is a statement by incoming House Majority Leader Kevin McCarthy, in response to a question about the U.S. Export-Import Bank: “One of the biggest problems with government is they go and take hard-earned money so others do things the private sector can do.”

As you might guess, McCarthy says he won’t support reauthorizing the bank’s charter.

My post the other day about the Foreign Account Tax Compliance Act (FATCA) generated a lot of interest among readers, both in the U.S. and abroad. In concluding that FATCA wouldn’t have a material effect on the value of the dollar or the U.S. economy, I was addressing a fairly restricted set of circumstances. Given the depth of interest in this topic, and the fact that the law does have serious implications—just not for the dollar—let’s dig in a bit more.