{"id":1536744,"date":"2025-05-18T15:40:00","date_gmt":"2025-05-18T19:40:00","guid":{"rendered":"https:\/\/bugaluu.com\/news\/?p=1536744"},"modified":"2025-05-18T15:40:00","modified_gmt":"2025-05-18T19:40:00","slug":"the-irony-of-moodys-downgrade-of-u-s-credit","status":"publish","type":"post","link":"https:\/\/bugaluu.com\/news\/the-irony-of-moodys-downgrade-of-u-s-credit\/1536744\/","title":{"rendered":"The Irony Of Moody’s Downgrade Of U.S. Credit"},"content":{"rendered":"

The Irony Of Moody’s Downgrade Of U.S. Credit<\/span><\/p>\n

\n

Submitted by\u00a0QTR’s Fringe Finance<\/a><\/em><\/p>\n

On Friday, the U.S. lost its last perfect credit rating as Moody\u2019s downgraded it from \u2018AAA\u2019 to \u2018Aa1,\u2019 citing decades of rising deficits and interest costs. This ends a perfect rating streak held since 1917. Moody\u2019s had warned in 2023 that a downgrade was possible, following similar moves by Fitch in 2023 and S&P in 2011.<\/p>\n

The layers of irony behind this downgrade\u2014and its timing\u2014aren\u2019t lost on me.<\/p>\n

It\u2019s a farce, really. By the logic Moody\u2019s is now applying, the downgrade should have happened a decade ago, when it became painfully clear that the U.S. had a crippling spending addiction, compounded by a monetary ideology that essentially tried to reverse the fundamental laws of debits and credits.<\/p>\n

Yes, it\u2019s bad enough that the U.S. now carries $37 trillion in debt. But what\u2019s worse is that, despite this massive burden, deficits have continued to grow\u2014clear proof that we\u2019ve learned nothing about fiscal restraint. Our refusal to stop putting everything on the national credit card, and our complete disregard for basic math and economic reality, should have triggered\u00a0multiple<\/em>\u00a0downgrades over the past decade.<\/p>\n

But the real kicker isn\u2019t just the reckless spending\u2014it\u2019s our full embrace of Modern Monetary Theory, which doesn\u2019t just ignore this irresponsibility\u00a0but actively encourages it<\/strong>. Yet, somehow, Moody\u2019s didn\u2019t see a problem with monetary policy anytime before Friday.<\/p>\n

To quote Peter Gibbons in\u00a0Office Space:<\/em><\/p>\n

\u201cIt\u2019s not that I\u2019m lazy, it\u2019s that I just don\u2019t care.\u201d<\/em><\/p>\n

<\/a><\/p>\n

Every time Paul Krugman wrote another column or Stephanie Kelton published a new book\u2014and then got a national media platform to promote it\u2014the U.S. deserved a downgrade.<\/p>\n

Every time the Federal Reserve and the people responsible for advocating asinine monetary theory put on full display their inability to understand the economy or forecast economic events, it should have sent a message to rating agencies that the country is flying blind when it comes to fiscal and monetary policy, and that we deserved a downgrade.<\/p>\n

When Ben Bernanke publicly said things like \u201cwe can print money at no cost,\u201d the country should have been downgraded.<\/p>\n

When Bernanke said the subprime crisis was \u201ccontained\u201d, before it caused the collapse of the entire global economy, we should have been downgraded.<\/p>\n

\ud83d\udd25\u00a050% OFF FOR LIFE:<\/strong>\u00a0Using this coupon entitles you to 50% off an annual subscription to\u00a0Fringe Finance\u00a0<\/em>for life:\u00a0Get 50% off forever<\/a><\/strong><\/p>\n

Every time a Fed governor like Neel Kashkari went on national television to declare that the Federal Reserve had \u201cinfinite money,\u201d we should have been downgraded.<\/p>\n

When Janet Yellen kept interest rates at 0% for years despite a roaring U.S. economy that was clearly no longer in need of unlimited stimulus, the country should have been downgraded.<\/p>\n

And every time an analyst, famous investor, government official, or Fed member incorrectly claimed that inflation was transitory when it wasn\u2019t, the country should have been downgraded.<\/p>\n

No, it wasn\u2019t just the backwards monetary policy we embraced to make ourselves feel better about our financial irresponsibility that should have led to downgrades; it was also the\u00a0ongoing parade of public gaffes and humiliations by everyone associated with the Treasury Department and the Federal Reserve over the last two decades<\/strong>.<\/p>\n

This put on full display to everyone in the world who was paying attention\u2014apparently except the rating agencies\u2014that we were on a treacherous path, destined to end in a catch-22.<\/p>\n

<\/a><\/p>\n

Moody’s analyst<\/em><\/p>\n

I used to write often not just about the Biden administration\u2019s fiscal irresponsibility, but also about the fact that they didn\u2019t even\u00a0pretend<\/em>\u00a0to care about financial responsibility.<\/p>\n

The Biden administration never even\u00a0talked<\/em>\u00a0about the idea of making cuts or balancing the budget\u2014the bare minimum any administration can do. Simply\u00a0talking<\/em>\u00a0about fiscal discipline is often enough politically; you don\u2019t even have to deliver results<\/strong>. But the Biden administration couldn\u2019t even manage that.<\/p>\n

And then along comes the Trump administration, running on the idea of trying to rein in spending and taking on the Herculean task of, at least in some small way, addressing the nation\u2019s out-of-control deficit. There\u2019s been talk about recalibrating global trade. There have been attempts\u2014however slow\u2014to curb spending through DOGE\u2019s effort. And there\u2019s been a focus on getting the country\u2019s financial house and deficit back in order for the first time in at least a decade.<\/p>\n

Only now, as the torch passes to the administration which, at the very least, is at least\u00a0talking<\/em>\u00a0about balancing the budget and taking some steps toward it\u2014Moody\u2019s shows up and casually downgrades the country\u2019s credit rating. Here\u2019s the timing of the downgrade on a chart, in a\u00a0way that only Zero Hedge<\/a>\u00a0can do:<\/p>\n

<\/a><\/p>\n

Chart: Zero Hedge<\/em><\/p>\n

Honestly, I don\u2019t know whether to laugh at the fact that this didn\u2019t happen a decade ago or at the fact that they waited until now\u2014when balancing the budget is finally part of the national conversation\u2014to do it. Either way, the downgrade is as hollow and performative as politicians jawboning about fiscal responsibility with no real intention of acting on it.<\/p>\n

I\u2019m not saying Moody\u2019s was wrong, I\u2019m saying it doesn\u2019t matter. The U.S. has already set its course. One way or another, we\u2019ll keep printing more money and relying on the dollar\u2019s status as the global reserve currency to futilely prop up our standard of living.<\/p>\n

There might be some adjustments in trade policy or spending, but our general trajectory was set after 2000, locked in after 2008, and supercharged by the unprecedented quantitative easing during COVID, when we simply papered over the entire economy with new cash, only to be befuddled by where excess inflation came from. Make no mistake: any time there\u2019s financial instability going forward, the U.S. will print money first and ask questions later. And whatever Moody\u2019s or any other rating agency has to say about it is irrelevant.<\/p>\n

Long ago, we embarked on an unprecedented monetary policy experiment. And the outcomes will be just as unprecedented. That means neither you, nor I, nor the same rating agencies that were all but complicit in the subprime housing crisis, can predict how this ends.<\/p>\n

Now read:<\/p>\n

The Drug Pricing Scramble<\/a>
\n\tTo Make Flying Safe, Make Air Traffic Control a Profit-Seeking Business<\/a>
\n\tAs Good As It Gets?<\/a>
\n\tDo The Rich Pay Their Fair Share of Taxes?<\/a>
\n\tThe Case Against Subsidizing Amtrak<\/a><\/p>\n

<\/a><\/p>\n

QTR\u2019s Disclaimer<\/strong><\/em>:<\/strong>\u00a0Please read my full legal disclaimer\u00a0on my About page here<\/a><\/em>.\u00a0This post represents my opinions only.<\/em>\u00a0In addition, please understand I am an idiot and often get things wrong and lose money. I may own or transact in any names mentioned in this piece at any time without warning. Contributor posts and aggregated posts have been hand selected by me, have not been fact checked and are the opinions of their authors. They are either submitted to QTR by their author, reprinted under a\u00a0Creative Commons license<\/a>\u00a0with my best effort to uphold what the license asks, or with the permission of the author.<\/em><\/p>\n

This is not a recommendation to buy or sell any stocks or securities, just my opinions. I often lose money on positions I trade\/invest in. I may add any name mentioned in this article and sell any name mentioned in this piece at any time, without further warning. None of this is a solicitation to buy or sell securities. I may or may not own names I write about and are watching. Sometimes I\u2019m bullish without owning things, sometimes I\u2019m bearish and do own things. Just assume my positions could be exactly the opposite of what you think they are just in case. If I\u2019m long I could quickly be short and vice versa. I won\u2019t update my positions. All positions can change immediately as soon as I publish this, with or without notice and at any point I can be long, short or neutral on any position. You are on your own. Do not make decisions based on my blog. I exist on the fringe. The publisher does not guarantee the accuracy or completeness of the information provided in this page. These are not the opinions of any of my employers, partners, or associates. I did my best to be honest about my disclosures but can\u2019t guarantee I am right; I write these posts after a couple beers sometimes. I edit after my posts are published because I\u2019m impatient and lazy, so if you see a typo, check back in a half hour. Also, I just straight up get shit wrong a lot. I mention it twice because it\u2019s that important.<\/em><\/p>\n<\/div>\n

Tyler Durden<\/a><\/span>
\nSun, 05\/18\/2025 – 11:40<\/span><\/p>\n

\u200bhttps:\/\/www.zerohedge.com\/markets\/irony-moodys-downgrade-us-credit<\/a>\u00a0<\/p>\n","protected":false},"excerpt":{"rendered":"

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