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An Important Thing To Note About Moody’s Downgrading US Debt
231 sats \ 3 comments \ @Cje95 16 May Politics_And_Law
This isn’t going to be the last time we hear about the US debt and deficit but there is something important to note about this move by Moody’s. Of the Big Three credit agencies they were the only ones that still maintained a US AAA bond ranking.
S&P had downgraded the US to AA+ all the way back in August of 2011 and Fitch Ratings cut the US to AA+ in August of 2023. This move by Moody’s while significant only brings it in line with the other credit agencies.
While I am sure the Democrats will try and spin this into a political issue it will be hard for them to make any substantial claim. The previous downgrades have been during Democratic Presidencies and when they had control of either the House or Senate. There spending bills have typically not lead to a reduction in debt or deficit over the years so they can’t really claim it.
Fiscal hawks will look to jump on this move however I don’t think they win out. I think this ends up forcing a ton of the holdouts of the bill from the Republican side to get in line and move the bill through the House and to the Senate. Members of the Freedom Caucus will try and capitalize on this but House leadership and Trump know they can’t move to the extreme because it won’t pass the Senate.
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10 sats \ 0 replies \ @Solomonsatoshi 23h
The USA is in decline. Trump is overseeing the decline. US voters may not be ready to face reality but credit rating agencies are belatedly. Who wants to buy the ~$7T USTs that need to be refinanced before Christmas? Anybody? The price of money is going up and the USA faces insolvency. Chinas mBridge is poised to compete head on with the antiquated USD/SWIFT hegemony and when Trumps threats and bluster are increasingly shown to be hollow man bluff the move away from SWIFT hegemony will be -swift! The petrodollar is dying. USTs going cheap, real cheap- FIRESALE! End of Empire. Trump and associates stashing their loot in 'crypto'.
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6 sats \ 0 replies \ @Solomonsatoshi 23h
'In some ways, the dollar has also become a de facto branch of the U.S. armed services. For over three decades now, the United States has increasingly weap- onized financial sanctions as an alternative to military intervention. To say that China has been watching U.S. actions to punish Russia would be an understatement.
As I have repeatedly emphasized, fear of sanctions is a major impetus underlying China’s drive to internationalize the renminbi, to develop its own central bank digital currency (as discussed in chapter 19), and to create parallel rails for clearing international financial transactions away from the prying eyes of U.S. authorities.
China’s payment system has already been accepted by some other countries. U.S. allies, who sometimes see shades of gray where Americans see black and white, are also concerned about U.S. financial sanctions overreach. Dismissing the allies as spineless, as the U.S. commentariat so often does, misses genuine disagreements that could later come back to bite the United States if it ignores them.
The ability to monitor global transactions and impose financial sanctions is great for the U.S. government but creates strong incentives for the rest of the world to circumvent not only the dollar but all parts of the plumbing of the in- ternational financial system over which the United States exerts control (major credit cards, dollar bank transfers, and the like).
K.Rogoff 'Our Dollar Your Problem' pg 216-217
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0 sats \ 0 replies \ @coinhome 16 May
Politics always plays a role in these issues
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