November 17, 2023
You know the term f*&( around and find out? Well – the US government and all of us are currently in the find out phase thanks to all the screwing around by Congress, the continued threats of government shutdowns over and over and all this polarization in our politics that has lead to a burn it all down mentality.
The consequence of all of that is the outlook of the American credit rating has been downgraded to “negative” by one of the big three credit rating agencies.
The big three credit rating agencies for governments are Fitch, S & P and Moody’s. I told you in several videos fitch and S&P already downgraded the actual credit of the United States from its highest level of AAA down to AA+. Well now the last of those three rating agencies – Moody’s has moved the United States credit rating outlook from “stable” to “negative.”
Moody’s made that move late last week and pointed to our country’s worsening financial situation, our massive $33.7 trillion debt and the polarization of our country’s politics. That – according to Moody’s sparks long term concerns about America’s economy and its ability to function.
Now this move down to a “negative” outlook isn’t a full blown downgrade of America’s credit rating – which – according to Moody’s is still at AAA. But it is another black mark on our economy. And indicates that Moody’s is willing, ready and able to downgrade the US credit rating in the future if this nonsense keeps up.
I told you in this video back in August, Fitch lowered the US’s long-term rating down to AA+ because of all the screwing around Congress did with the debt ceiling back in the spring. And prior to that, in 2011 when Congress did the same with the debt ceiling –S&P stripped the US of it’s perfect AAA credit rating, downgrading it to AA+. To this day S&P has not returned the United State’s credit rating to AAA and neither has Fitch. The government accountability office estimated that downgrade back in 2011 and that debt ceiling standoff raised the Treasury’s borrowing costs by $1.3 billion. We haven’t seen the full effects of the Fitch downgrade yet but we will soon. And now Moody’s too is saying the US is not on the right path, pointing to the fact that Congress hasn’t been able to pass full year spending bills and keeps passing these continuing resolutions. And says the cost of our massive debt is going to – very soon– become unsustainable if congress doesn’t turn the ship around.
Now – your eyes may be glazing over – but the fact is – the debt, these downgrades actually impact you and me. According to the Congressional Budget Office, the consequences of high and rising debt and these downgrades include, a situation where investors lose confidence in the US government’s ability to pay its debt which causes abrupt interest rate increases and inflation to spiral upward, it also increases borrowing costs and slows growth of all the goods and services the United States produces and if lawmakers don’t get the debt under control, they’ll be forced pay for ballooning interest payments on this debt instead of paying for other priorities like programs and services you rely on.
Moody’s stable to negative reasons why here.
