Collapse: Moody's Downgrades US Credit From Top-Tier Rating In Sign Of Failing Economy, Bond Selloff And Rising Yields
The U.S. is headed for a full-blown credit freeze...
On Friday night, not long after the markets closed for the weekend, credit rating agency Moody’s downgraded U.S. debt from its top-tier “AAA” rating to “Aa1”, joining the other two large credit agencies, Fitch and Simon & Poors, who already downgraded U.S. debt in 2003. This bellwether event clearly signals to the world that the U.S. economy is no longer as strong as it once was and its debt holdings are no longer as reliable, and will cost more to service both foreign and domestically.
The agency changed its outlook on the U.S. to "stable" from "negative."
Moody’s said in a statement explaining the downgrade (excerpts):
This one-notch downgrade on our 21-notch rating scale reflects the increase over more than a decade in government debt and interest payment ratios to levels that are significantly higher than similarly rated sovereigns.
Successive US administrations and Congress have failed to agree on measures to reverse the trend of large annual fiscal deficits and growing interest costs.
We do not believe that material multi-year reductions in mandatory spending and deficits will result from current fiscal proposals under consideration.
Over the next decade, we expect larger deficits as entitlement spending rises while government revenue remains broadly flat.
In turn, persistent, large fiscal deficits will drive the government's debt and interest burden higher.
The US' fiscal performance is likely to deteriorate relative to its own past and compared to other highly-rated sovereigns.
The stable outlook reflects balanced risks at Aa1.
The US retains exceptional credit strengths such as the size, resilience and dynamism of its economy and the role of the US dollar as global reserve currency. In addition, while recent months have been characterized by a degree of policy uncertainty, we expect that the US will continue its long history of very effective monetary policy led by an independent Federal Reserve.
The stable outlook also takes into account institutional features, including the constitutional separation of powers among the three branches of government that contributes to policy effectiveness over time and is relatively insensitive to events over a short period.
While these institutional arrangements can be tested at times, we expect them to remain strong and resilient.
Andy Brenner, head of NatAlliance Securities, told the Financial Times, “The biggest problem out there now is not the tariffs, it is the lack of progress on deficit talks in DC.”
Joe Blogs succinctly summarized what all of this means big picture:
AUTHOR COMMENTARY
If these credit agencies were honest, they would have dropped their ratings of U.S. debt levels lower years ago, but they are too complicit in helping to keep this global Ponzi scheme going for longer than it should have;
Notwithstanding, this move indicates that the U.S. economy is fracturing even faster as the world has had enough of the American empire, its economic and military hegemony; and such actions as this debt downgrade will only push more countries to look elsewhere.
As I have mentioned before - the U.S. is headed and destined for a full-blown sell-off in debt/credit/bond markets, which will be signified when bond yields rapidly spike in succession and out of control, as the Federal Reserve and other central banks, private investors and foreign nations dump their holdings; this leading to a credit freeze, where banks can no longer lend because the bonds won’t be seen as valuable anymore since the system operates and depends on a constant flow of debt and credit. This means transactions come to a halt, all of them; credit/debit cards will not work; it all comes to a stop and creates such a ripple effect you won’t even believe it. This will result in one big final print, hyperinflating into the new digital programmable currencies.
Proverbs 22:26 Be not thou one of them that strike hands, or of them that are sureties for debts. [27] If thou hast nothing to pay, why should he take away thy bed from under thee?
Call it fearmongering if you want, but it will happen whether you choose to recognize it or not.
[7] Who goeth a warfare any time at his own charges? who planteth a vineyard, and eateth not of the fruit thereof? or who feedeth a flock, and eateth not of the milk of the flock? [8] Say I these things as a man? or saith not the law the same also? [9] For it is written in the law of Moses, Thou shalt not muzzle the mouth of the ox that treadeth out the corn. Doth God take care for oxen? [10] Or saith he it altogether for our sakes? For our sakes, no doubt, this is written: that he that ploweth should plow in hope; and that he that thresheth in hope should be partaker of his hope. (1 Corinthians 9:7-10).
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Cyberattack/ banking holiday looming