US Loses AAA Credit Rating by S&P
For the first time since 1941 the US has been downgraded. And it turns out the ceiling isn’t the problem, the deficits/overspending are the problem. And DC is standing in a deep dark debt hole, looking at the bottom, and saying this "ceiling" is a problem. Paul Volcker rescued the dollar in the late ’70s by raising the Federal funds rate to a high of 20%! It stopped inflation and restored confidence in the dollar. The same would not be possible today. Last year we spent about 20% of our tax revenue on interest, with rates at 3-4%. If interest rates were five times as high it would take 100% of our tax revenue to pay the interest. So when the rates begin to head up just remember that the kind of intervention we took last time round isn’t even an option.
S&P Cuts U.S. Rating for First Time on Deficit Reduction Pact – Bloomberg: www.bloomberg.com/news/2011-08-06/u-s-credit-ratin….html