Posted on 05/20/2025 6:34:53 AM PDT by delta7
Moody’s Investor Service downgraded the United States’ credit rating from a top-tier rating of AAA to AA1 due to rising government debt. Fitch Ratings lowered the US debt in August 2023 for the same reason in August 2023, and while Moody’s did not officially act at the time the agency warned that the US was at risk of a downgrade.
The United States has enjoyed AAA status since 1917—this downgrade is a dire warning. At the current trajectory, the $36 trillion+ deficit is expected to advance from 5.4% of GDP in 2024 to around 9% by 2035. Moody’s believes the United States still offers “exceptional credit strengths,” but debt and payment ratios are now “considerably higher than those of similarly rated sovereign entities.” The agency also cited political instability as a concern, as Republicans and Democrats have been unable to align on methods to meaningfully reduce the deficit.
Treasuries rose following Friday’s downgrade, with the 30-year rising above 5% and the 10-year reaching 4.54%. Investors see a larger risk in government debt and are demanding increased compensation for holding it.
America no longer has the “gold standard” symbolic rating that for years signaled to investors that the US was the safest place to park reserves. This could be a hit to overall confidence, yet there is no better alternative than the US. Increased borrowing costs will only cause the deficit to rise.
The government pays an astronomical fee to simply service its debt, with projections from the Congressional Budget Office for 2025 slated to be $952 billion. The US has already paid out $579 billion in the first seven months of FY2025 simply for the burden of holding such an asinine amount of debt. Debt servicing costs are expected to surpass the $1 trillion mark by 2026, with total interest payments over the next decade rising to $13.8 trillion.
Watch closely, one of Trump’s son is promoting Bitcoin, the other Gold. Something is up, and I trust President Trump has a plan.
Our government spends too much.
Note that this is twice as much as the amount of U.S. treasuries that China owns, and that we make regular payments to.
The US definitely deserved this. Our spending has been out of control since the Bush II Administration. But if it was a "warning", it should have occurred during the Biden Administration when spending hit truly insane levels.
BRICS isn’t a worry, but the debt and Treasury yields rising ARE a worry.
We need to get this crap under control. Growth will help, but spending must must must must must be cut.
> Our government spends too much. <
For sure. It is worth noting that Trump 1.0 did not veto a single spending bill. I get that the problem is Congress. But the buck stops at the Oval Office.
Let’s hope Trump 2.0 draws a line in the sand.
Our government spends too much.
Because that’s what the voters want.
Voters are stupid, I'm told that half the population is BELOW the mean intelligence. Politicians just want to get re-elected - perhaps this vicious cycle is the best argument for term limits.
Voters are stupid, I’m told that half the population is BELOW the mean intelligence. Politicians just want to get re-elected - perhaps this vicious cycle is the best argument for term limits.
Garbage In, Garbage Out ..... Selfish voters leads to selfish politicians.
I think Trump is a big spender. He didn’t campaign on reducing spending.
All eyes on the “ Rio Reset”. Trump’s son I assume is in the know, and I trust Bessent has a well thought out strategy. .
If USA was a private corporation it’s credit rating would be CCC-
But because federals have racing powers and money printing machine, it is still AAa-.
All real estate developers are big spenders.
Maybe. Reminder: Moodys and the others fraudulently kept the bond ratings for Lehman Bros. and others UP during the subprime crisis, so I take what they say with a grain of rocksalt.
the debt and Treasury yields rising ARE a worry.
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Judy Shelton has mentioned in numerous interviews 50 and 100 year Gold backed Treasuries….Many closely watching think the US will see how the much talked about Rio Reset goes.
https://en.wikipedia.org/wiki/List_of_countries_by_credit_rating
This is a list of countries by credit rating, showing long-term foreign currency credit ratings for sovereign bonds as reported by the largest three major credit rating agencies: Standard & Poor’s, Fitch, and Moody’s.
This downgrade is totally political...
It is indeed. It might have been averted if the Big Bad Bill had featured more cost-cutting rather than increased spending for Chinese solar panels etc.
President Trump is in a foot race to mollify the bond vigilantes by trimming the annual deficit but he is hobbled by a political reality that will not abide spending cuts. We would not significantly cut spending after the revelations of DOGE, so the hill Trump must climb is higher and steeper.
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