US Treasury Secretary Scott Bessent rebuked Moody’s lowered score of US credit score from AAA to AA1. “First of all, I think that Moody’s is a lagging indicator, and I think that’s what everyone thinks of credit agencies,” Bessent stated. “Larry Summers and I don’t agree on everything, but he’s said that when they downgraded the U.S. in 2011. So it’s a lagging indicator.”
The US Treasury Secretary should keep that the nation’s economic system is in sound well being. Former Treasury Secretary Janet Yellen voiced related sentiments final yr when Fitch downgraded the US credit score, calling the transfer “arbitrary.” “I strongly disagree with Fitch’s decision. The change announced today is arbitrary and based on outdated data,” Yellen insisted. She then went on to insist the federal authorities had the funds to again two wars in Ukraine and Palestine, as there isn’t any spending restrict for governments.
The distinction this time is that Moody’s has not downgraded US credit score since 1917. The problem just isn’t client confidence within the US and even investor confidence. The first concern is CONFIDENCE within the system itself that has clearly been failing. Over 70% of US debt is short-term, and Washington has been unable to go or adhere to a funds. The Democrats are saying that that is cause to gather extra tax income, whereas the Republicans intention to curb authorities spending. Each fail to appreciate that they’re too late both manner, and the system itself should change as a result of the issue can’t be mounted with the identical line of considering that created this catastrophe within the first place.
Capital just isn’t going to flee the US due to Moody’s downgrade. The place else wouldn’t it go?
Scores businesses are certainly reactionary reasonably than proactive. The debt disaster has been looming for a very long time. The Financial Confidence Mannequin turns once more in late 2026, and we’re watching the start of the top for presidency debt as a reliable asset class.
