Moody's affirms United States' Aaa rating; maintains stable outlook

Moody's ^ | June 24, 2022 | N/A

[DoodleBob]

New York, June 24, 2022 -- Moody's Investors Service ("Moody's") has today affirmed the Government of United States of America's (US) Aaa long-term issuer and senior unsecured ratings. The outlook remains stable.

The rating affirmation is driven by Moody's view that the US is emerging from the pandemic shock with its credit strengths intact, underpinned by exceptional economic strength, high institutional and governance strength, and the unique and central roles of the US dollar and US Treasury bond market in the global financial system, which among other benefits provide extraordinary funding capacity. The US' strong policy response to the pandemic supported a very swift and early recovery that avoided economic scarring and demonstrated the government's capacity to manage shocks. Moody's expects the US economy and the sovereign's credit profile to remain resilient to shocks, including the current challenges to the global economy from high and persistent inflation, tightening financial conditions, and the Russian invasion of Ukraine. Risks to the US economy have materially increased and could lead to a sharper than expected slowdown, or potentially a recession, driven by increasing monetary policy tightening over the next few quarters... However, in Moody's view, US institutions, including the Federal Reserve, will effectively manage these challenges and the US economy will demonstrate its resilience.

The stable outlook reflects Moody's view that the diversity, dynamism, and competitiveness of the US economy, along with the US dollar's status as the preeminent international reserve currency and very large size and depth of the US Treasury market, will continue to offset rising fiscal pressures and periods of economic slowdown...However, the US' fiscal strength is expected to deteriorate at an increasing rate over time as higher ageing-related entitlement spending and interest payments drive persistent fiscal deficits, absent material revenue or entitlement reforms.

[DoodleBob]

They're right.

Before the Eeyores start in, here are a few things for perspective.

America makes up 4% of the world's population...

...and yet we crank out 24% of the planet's GDP.

And while we are at the top of the Countries that Consume the Most Oil (2020 barrels per day)

United States — 17,178,000
China — 14,225,000
India — 4,669,000
Saudi Arabia — 3,544,000
Japan — 3,268,000
Russia — 3,238,000
South Korea — 2,560,000
Brazil — 2,323,000
Canada — 2,282,000
— Germany 2,045,000

...we also top the list of Countries with the Highest Oil Production (barrels per day)

United States - 11,567,000
Russia - 10,503,000
Saudi Arabia - 10,225,000
Canada - 4,656,000
Iraq - 4,260,000
China - 3,969,000
United Arab Emirates - 2,954,000
Brazil - 2,852,000
Kuwait - 2,610,000
Iran - 2,546,000

Thus, we Americans, making up only 4% of the planet's headcount, produce about a quarter of GDP - punching way above our weight. In relative contrast, China is a joke.

And if THAT wasn't cool enough, America's 4% of the population is at the top of the equity market food chain:

And, of course, we win the gun race by a mile...

....but we're not losing the murder race.

As for the national debt, we have trillions in untapped oil and gas and mineral resources. IER estimated the worth of the government’s oil and gas technically recoverable resources to the economy to be about 8 times our national debt.

There are lots of problems in the US, but did you notice that even the economic doom newsletter sellers always take payment in fiat currency? So all the Francises...sit down, there is much for which we should be thankful.

[PeterPrinciple]

There are lots of problems in the US, but did you notice that even the economic doom newsletter sellers always take payment in fiat currency? So all the Francises...sit down, there is much for which we should be thankful.

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We have the best crappiest money in the world. It is relative.

[PeterPrinciple]

https://thenewamerican.com/us-debt-downgrade-by-chinese-rating-agency-is-inevitable/

---

What does China say on the matter?

Your points and observation are valid. Compared to the rest of the world we are Golden. But our wealth was earned in prior generations, and we are spending our inheritance.

[Jonty30]

Things always seem state, until they are not and there is a rapid spiral downward that catches everybody off by surprise.

[Sacajaweau]

Don’t give a sh** about the ratings. I do care about the price at the pump and at the grocery store.

[Salman]

If I had a million to invest safely and conservatively, T-Bill still look good.

But what if I have $20 to "invest" in groceries?

[SamAdams76]

Thanks for your post - definitely puts things in perspective.

I also highly recommend the Peter Zeihan books "The Accidental Superpower" and "The Absent Superpower."

Both books speak about American exceptionalism and how America is well situated for long term prosperity even while the rest of the world descends into chaos.

I know we are going through a dark period right now and according to the gloom and doomers, the bad guys have the upper hand. But long term, we Americans will come out of it, as we always do.

We can start turning the tide this coming November.

[DCBryan1]

Honestly, we are A- negative outlook IMHO. Another year of Biden, then Kamela, then Chelsea Clinton, CCC-

[ecomcon]

Well, I do have my share of Eeyore. Hoping you are right, but the trends are all in the red. As they say, hope is not a plan.

An animated version of your charts, over time, would be very interesting.

All of our institutions are now owned by pagans on the left. The prosperity in the past came from believers on the right.

[Flick Lives]

Moody's affirms United States' Aaa rating; maintains stable outlook

I'm reminded of a scene from "The Big Short" where they talk to the woman from Moody's about how the housing derivatives can possibly carry such a high rating. And to add the perfect symbolism to the scene, the woman from Moody's is wearing dark shades having just been to the eye doctor.

[GBA]

In the Murders vs Gun Ownership chart, it appears as though the higher the gun ownership, the lower the murder rate.

We, the people, are well-armed, yet seemingly well-restrained also, as are the other high gun ownership countries.

Does this mean that human nature and the second amendment go well together?

[T.B. Yoits]

Moody's Rating?

The same Moody's that missed/deceived investors while rating subprime mortages?

https://www.cbsnews.com/news/moodys-to-pay-864m-to-settle-claims-it-inflated-ratings-leading-up-to-financial-crisis/

[mewzilla]

Moody’s...

https://www.theguardian.com/business/2017/jan/14/moodys-864m-penalty-for-ratings-in-run-up-to-2008-financial-crisis

...is about as trustworthy as the CDC.

[mewzilla]

LOL! Great minds, eh? 😄

[moovova]

"Moody's $864m penalty for ratings in run-up to 2008 financial crisis"

"Moody's fined: Agency admits to false credit ratings | eNCA"

[moovova]

Yep, I’m surprised it took 12-13 comments into this thread to refresh people’s memories. (See #13)

[moovova]

Oops...and comment #15.

[Wallace T.]

There is something of a desire among some to see the system fail, because the institutions of our society are largely in the hands of atheists, whether open or not. Doom and gloomers have been around long before Alex Jones was born. The bottom line is that judgment is of the Lord.

[bert]

However......... many fearful foreign investors prefer American real-estate to treasury bonds

Ditto many Americans

[cgbg]

Many of the smartest folks in the room see a scenario where other countries have their economies collapse before the US does.....

but our day of reckoning is still coming....

because that debt that cannot be paid will not be paid.