The BBC reports:
The US government's credit rating has been downgraded following concerns over the state of the country's finances and its debt burden.
Fitch, one of three major independent agencies that assess creditworthiness, cut the rating from the top level of AAA to a notch lower at AA+.
. . .
"The rating downgrade of the United States reflects the expected fiscal deterioration over the next three years, a high and growing general government debt burden, and the erosion of governance" relative to peers, said Fitch in a statement ... Fitch also said it expects the US to slip into a mild recession later this year.
There's more at the link.
It's just like a personal credit rating. Borrow too much, owe too much money, and the credit bureaux are going to lower your credit score accordingly. With a lower credit score, you may not qualify for certain loans: or, if you do, they're likely to be at a higher interest rate, reflecting the increased risk to the lender that you may find yourself financially overstretched and unable to pay off the loan on time.
The USA is no different. A lower credit rating for US bonds means that investors will look for a higher rate of interest to justify investing in them. They'll get it, of course, because the USA funds a very large proportion of its annual budget by borrowing money, and can't afford to do without it. However, the added interest costs will push our budget even further into the red. Fox Business reported earlier:
The [Congressional Budget Office's] recently released budget and economic outlook for the next 10 years projects that the cost of servicing the national debt will more than double in that timeframe and the government will spend about $10.5 trillion on interest expenses alone over the coming decade. Spending on interest as compared to the size of the U.S. economy is also expected to rise from 2.4% of the gross domestic product in fiscal year (FY) 2023 to 3.6% of GDP in FY2033.
In FY2022, American taxpayers spent $475 billion in interest expenses on the national debt — a figure that is expected to rise to $640 billion in the current fiscal year, FY2023. As the federal government continues to run budget deficits and the debt level rises in the coming years, the amount spent on interest is projected to exceed $1 trillion for the first time in FY2029 and rise to $1.4 trillion in FY2033.
Again, more at the link.
Guess where those 10.5 trillion dollars for interest expenses are going to come from? That's right, dear reader - out of your and my pockets. Businesses may pay some, but they turn right around and charge us, their customers, to recover those costs, so it still comes out of our pockets. More will come from borrowing - but we'll have to repay those loans, too, so it's still ultimately a burden on the individual taxpayer. I don't recall anyone asking us whether we were willing to pay those insanely high amounts in interest, do you?
We could fix this tomorrow with a balanced budget amendment, requiring the Federal government to spend no more than it receives in tax revenues every year. However, to accomplish that, we'd have to do away with most of the entitlement spending that cripples our government every year. The "gimme dat!" population would scream to high heaven if we did, and riot, and make sure that politicians who vote for such a measure would never be re-elected; so those politicians won't touch the issue with a ten-foot disinfected bargepole. In so many words, they're cowards.
Oh, well. As Aaron Clarey urges us, "Enjoy the decline!"
Peter
This is a pretty big deal folks.
ReplyDeleteThe collapse is starting.
I'm SHOCKED, I say, Shocked, to find Gambling in this place, round up the usual suspects."
ReplyDeleteA Mismash from Casablanca but seems apt in the Clown World of District of Criminals". Fake outrage from the Repugs about the reckless spending of the Demoncraps when all are feeding from the pockets of "We the People" and our children's economic slavery for generations to come.
Let us start a nice "controllable little WAR" (like there is such a thing with nukes on the table) to DISTRACT the "People" from the rape, robbery and murder of our once fine Republic.
Military Sports Ball THAT'S the Ticket, Remember the Maine and revenge for 911 worked before... Let's DO the Orville 20 seconds of HATE against Russia!
Maybe a false flag nuclear attack from "East Asia" will RALLY the PEEEEOPLE. (Yes, they ARE that Criminally Insane)
Like Russia caused us to overspend and do bread and circuses with the Gimme Dats for decades, Forced us to open our borders to swarms of bussed in military aged males EAGER to eat from our EBT and Social "Safety Net".
The USA has been the bully world policeman and overused its main advantage of World Reserve Currency as a club with bribes and Sanctions on anybody that didn't doff their cap and beg for forgiveness.
I Cannot Wait for Aesop's brilliant social-political-military explanation why we should not be CONCERNED about the raging economic waterfall coming due soon to each of our families IF a bright flash doesn't supersede that concern.
Creator: Ernest Hemingway, U.S. author, winner of Nobel Prize in Literature
Context: The character Mike Campbell in the 1926 novel “The Sun Also Rises” was asked about his money troubles and responded with a vivid description embracing self-contradiction:[1]
“How did you go bankrupt?” Bill asked.
“Two ways,” Mike said. “Gradually and then suddenly.”
“What brought it on?”
“Friends,” said Mike. “I had a lot of friends. False friends. Then I had creditors, too. Probably had more creditors than anybody in England.”
The BUTCHERS BILL draws nigh, protect your family and trusted friends, crazies own the government, and their #1 Priority is to Survive and Grow in POWER. You and I are but cattle and sheep to be "managed" and slaughtered as needed for THEIR NEEDS.
Pray for wisdom and get busy.
For me, the negotiations for 'cutting out the fat' shouldn't wait for this to happen. Cutting excess from the budget should be a year round effort from both sides of the aisle. When an emergency occurs, compare lists and see which items are a go for both sides.
ReplyDeleteIn an emergency, only critical expenditures should be made. Until emergency ceases, no foreign aid to any country shall be paid until crisis is over. Non citizens will not receive tax payer benefits until crisis is over. These measures are meant to motivate the congress person to act now.
Former congressman Ron Paul and an '08/'12 presidential candidate warned us about these things in his farewell address to Congress. That can be found online to read or listen to. Everything he said was prophetic.
ReplyDeleteSadly, many a conservatard that whines about 'muh taxes' and 'big government' showed no respect for him. I will always despise the GOP for the way he was treated. Rush Limbaugh showed his establishment whore side by not endorsing him.
"The "gimme dat!" population would scream to high heaven if we did, and riot..."
ReplyDeleteAnd that's the spark in the tinder.
The biggest "gimme dat" population lives in the N Virginia suburbs and works in D.C. for Fed govt or one of the hundreds of camp followers businesses that live off taxpayers. First in line is the military industrial complex and their redhead step child intel/surveillance agencies along with mass media and Silicon Valley.
DeleteAnon, "cutting the FAT"? Really??
ReplyDeleteMost of that "FAT" is social programs like EBT and welfare.
You KNOW Bread and Circuses keeping the Gimme Dats from burning down the cities.
The Pigs at the trough are NOT going to vote themselves LESS FOOD.
Let's vote HARDER, GET OUR Pigs at the trough, that worked so well last time.
We're at Trajan's Collapse of Rome but with Wi-Fi and social media so the trouble gets around faster.
Can things stagger along a few more years? Maybe. Will things get "better", WELL that depends on who is writing the media reports and what "BETTER" means.
Protect your family and trusted friends. Far more important than Military Sports Ball and electronic digits in the bank.
I don't think a balanced budget amendment is enough. To ensure government spending is for essentially what was considered the government's provenance in the originalists' intent (from their writings, aka Federalist Papers), we'd need to cut taxes. A Flat Tax would be fair, close all loopholes and end this progressive nightmare.
ReplyDeleteI don't recall anyone asking us whether we were willing to pay those insanely high amounts in interest, do you?
ReplyDeleteYes, I do recall being asked. American politicians aren't installed in power by lizard-like space aliens in round silver spaceships, they are voted on by the middle class. No government can exist without widespread compliance. In every time and place, the bulk of average people are in charge. If six million people weren't willing to voluntarily pack up and get into boxcars, there would have been no death camps.
The "gimme dat!" population would scream to high heaven if we did, and riot, and make sure that politicians who vote for such a measure would never be re-elected;
The "gimme dat!" population are the middle-class government-mandated workers and retirees who want to receive tax moneys for makework jobs. The most useful fruit of the Ron Paul presidential campaigns was proving 90% of voters don't want sanity. Now that you know 90% of Americans are willing to stampede off a cliff, plan accordingly.
" ... we'd have to do away with most of the entitlement spending ..."
ReplyDeleteWhenever I see this discussion, I always try to point out that the programs that were paid into for years by the recipients, like Medicare, Social Security and Military Retirement, should not be lumped in with the "Gimme Dat" programs. Of course non-citizens should not qualify for anything except a free ride home.
Trillions added to national debt semi-annually. Fed Reserve at or near insolvency. Rampant inflation. Severe logistics problems.
ReplyDeleteTwo weeks ago I uttered that the full faith and credit of the U.S. is kerplumpt.
I always try to point out that the programs that were paid into for years by the recipients, like Medicare, Social Security and Military Retirement, should not be lumped in with the "Gimme Dat" programs.
ReplyDeleteRecipients expect way more out of them than they put in, which is why they are "Gimme Dat" programs. Every retirement recipient expects $250,000 of healthcare in the last year of life, without selling their paid-for house to pay for it. These programs are Ponzi schemes. There is no pool of savings, and payouts are paid out in the same year they are paid in. There is nothing honest about them, they were mathematically insolvent the day they were created. What retirees want is medical care, hip replacements and nursing homes, but you can't store doctors and nurses in a government warehouse. Even if the government had held savings in gold coins, shiny stamped metal disks are not doctors and nurses. Given the worldwide decline of birthdate, there is no other medically skilled population elsewhere in the world you can trade the shiny metal disks to. There is no way to plan for support in retirement, except to have had the children to do it and pay for them to attend medical school. The retiring baby boom is going to experience the retirement income they've been voting and planning for their whole lives. Those "I'm spending my children's inheritance" bumperstickers should be applied over their nose and mouth.
Anon while your points are interesting.
ReplyDeleteWhen will YOU OFF yourself as not to be a Drag on the System?
After all you're a DEEP thinker and KNOW your monies INTO the system are almost moot in your own words.
I wasn't ASKED to donate money into the Social Security System. It was Mandatory by the Gov.com. I know how well my own investments of my REMAINING money after MANDATORY Taxes and living expenses how much I have to live on in my retirement and hopefully pass onward to my children-grandchildren.
I KNOW that I'd have a LOT more Money IF I had not been forced to pay into Social Security, given my personal history of investments.
SO SORRY If I EXPECT some return for the Gov.com "Investing" my money under color of law.