MOODY credit agency has reduced the credit rating of the US government from AAA to AA1, noting the increasing national debt as the main driver behind the creditworthiness reduction.
According to May 16 advertisement From the classification agency, legislators in the United States failed to stop the annual deficit or reduce spending over the years, which has increased national debt. The classification agency wrote:
“We do not believe that the multiple discounts of the multi -year year of spending and mandatory deficit will result from the current financial proposals in the next decade, we expect a greater deficit with the high spending on entitlement while government revenues remain widely flat.”
Credit reduction is only one degree of the 21st classification scale by the company to evaluate the entity’s credit health.
Although negative to medium to medium credit expectations, it maintained a long -term positive view of the United States, noting its strong economy and the position of the US dollar as the global reserve currency as a power force, reflecting the “balanced” risk.
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Investors interact with MOODY US credit review
MOOUDY Declaration Drawing Mixed Reactions from Investors and Market Participants, leaving many revised expectations of the agency.
Gabor Gurbacs, CEO and founder of Crypto Loyalty Rewards Pointsville, was martyred with previous credit assessments of the classification agency during financial tension times as unreliable, indicating that expectations were very optimistic.
“This is the same MOOOY who gave AAA categories to securities-backed by mortgage that led to the financial crisis 2007-2008,” the executive director wrote on May 17. mail.
However, the macroeconomic investor, Jim Bianco, argued that the last MOODY credit expectations do not reflect a real reduction in the credit wall of the American government and Premium Advertising as “nothing burger”.
US government debt exceeded $ 36 trillion in January 2025 and no signs of slowdown appeared, despite the recent efforts made by Elon Musk and others to reduce federal spending and reduce national debt.
With debt climbing and investors lose their confidence in US government securities, bond returns will rise, causing the payment of debt service payments, which increases the inflation of national debt.
This creates a vicious cycle, as the government will have to seduce investors through constantly revenue to motivate them to buy government debts.
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