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Moody’s US Downgrade AAA to AA1
Armstrong Economics ^ | 20 May 25 | Martin Armstrong

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.


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KEYWORDS: moody
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US Treasury 30 year debt instruments now rising to 5 percent, sounds like a Bond market collapse on the horizon…..Brics summit in July, Trump’s son bringing awareness to the “Rio Reset”, yes, President Trump is aware, stay tuned.
1 posted on 05/20/2025 6:34:53 AM PDT by delta7
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To: delta7

Watch closely, one of Trump’s son is promoting Bitcoin, the other Gold. Something is up, and I trust President Trump has a plan.


2 posted on 05/20/2025 6:37:02 AM PDT by delta7
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To: delta7

Our government spends too much.


3 posted on 05/20/2025 6:39:29 AM PDT by 1Old Pro
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To: delta7
Trump should every day hold up one of the old paper $1.6 trillion in unpaid Chinese treasuries that Americans own, dating back to 1911, and publicly tell everybody that China does not pay its bills. China's bond rating should be C for Crap Hole.

Note that this is twice as much as the amount of U.S. treasuries that China owns, and that we make regular payments to.

4 posted on 05/20/2025 6:42:00 AM PDT by Tell It Right (1 Thessalonians 5:21 -- Put everything to the test, hold fast to that which is true.)
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To: delta7
The United States has enjoyed AAA status since 1917—this downgrade is a dire warning.

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.

5 posted on 05/20/2025 6:43:27 AM PDT by Opinionated Blowhard (When the people find that they can vote themselves money, that will herald the end of the republic.)
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To: delta7

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.


6 posted on 05/20/2025 6:45:21 AM PDT by Recovering_Democrat
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To: 1Old Pro

> 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.


7 posted on 05/20/2025 6:45:41 AM PDT by Leaning Right (It’s morning in America. Again.)
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To: 1Old Pro

Our government spends too much.


Because that’s what the voters want.


8 posted on 05/20/2025 6:46:03 AM PDT by dfwgator (Endut! Hoch Hech!)
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To: dfwgator
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.

9 posted on 05/20/2025 6:50:41 AM PDT by 1Old Pro
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To: 1Old Pro

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.


10 posted on 05/20/2025 6:57:27 AM PDT by dfwgator (Endut! Hoch Hech!)
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To: Leaning Right

I think Trump is a big spender. He didn’t campaign on reducing spending.


11 posted on 05/20/2025 6:58:45 AM PDT by TTFX
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To: Recovering_Democrat

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. .


12 posted on 05/20/2025 7:00:17 AM PDT by delta7
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To: delta7

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-.


13 posted on 05/20/2025 7:01:08 AM PDT by Bobbyvotes
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To: TTFX

All real estate developers are big spenders.


14 posted on 05/20/2025 7:02:09 AM PDT by Bobbyvotes
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To: delta7

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.


15 posted on 05/20/2025 7:03:40 AM PDT by LS ("Castles made of sand, fall in the sea . . . eventually." Jimi Hendrix)
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To: Recovering_Democrat

the debt and Treasury yields rising ARE a worry.
————-
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.


16 posted on 05/20/2025 7:04:06 AM PDT by delta7
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To: delta7

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.


17 posted on 05/20/2025 7:07:56 AM PDT by PeterPrinciple (Thinking Caps are no longer being issued, but there must be a warehouse full of them somewhere)
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To: delta7

This downgrade is totally political...


18 posted on 05/20/2025 7:09:16 AM PDT by Sacajaweau
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To: delta7
this downgrade is a dire warning

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.


19 posted on 05/20/2025 7:09:59 AM PDT by nathanbedford (Attack, repeat, attack! - Bull Halsey)
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To: Recovering_Democrat
Chip Roy and Rand Paul do not appear today to be quite the villains they were yesterday.


20 posted on 05/20/2025 7:12:57 AM PDT by nathanbedford (Attack, repeat, attack! - Bull Halsey)
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