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Why did Fitch downgrade U.S. “Debt”? It’s not what you may think.

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Summary

This article discusses the recent decision by Fitch to downgrade the U.S. debt rating from AAA to AA+. The downgrade was mainly because of political infighting, specifically the Republican Party's unwillingness to raise the debt limit. The article explains why the debt limit is irrelevant to the federal government's ability to service its debt and why inflation has nothing to do with the federal government's ability to pay its bills. It also explains why the Fitch downgrade is a legitimate warning of the potential political risks of investing in U.S. debt.

Q&As

What is the purpose of credit ratings?
The purpose of credit ratings is to assess the likelihood that an issuer of a debt document will adhere to the terms of the document.

What is the key to the downgrade of the U.S. debt/money?
The key to the downgrade is item “B,” the “not default” claim.

What role does political infighting play in the downgrade of the U.S. debt/money?
Political infighting is the sole reason for the downgrade.

What is the main reason for the downgrade of the U.S. debt/money?
The main reason for the downgrade of the U.S. debt/money is the Republican party's refusal, for political reasons, en masse, to authorize future payment.

What does Alan Greenspan, Ben Bernanke, and the St. Louis Fed say about the U.S. government's ability to pay its dollar debts?
Alan Greenspan, Ben Bernanke, and the St. Louis Fed say that the U.S. government has the infinite ability to create enough dollars to pay all its dollar-denominated debts.

AI Comments

👍 This article provides an interesting and informative analysis of the Fitch downgrade of the U.S. debt and how it relates to the political infighting between the two major parties.

👎 This article is overly long and fails to provide any real solutions to the problem of the Fitch downgrade.

AI Discussion

Me: It's about why Fitch recently downgraded the US debt. It talks about the implications of this downgrade and how it could impact the global markets.

Friend: That's really interesting. So, what are the implications of the downgrade?

Me: Well, the article suggests that the downgrade is mainly due to the political infighting within the US government, rather than economic factors. It points out that the US government is monetarily sovereign and has the infinite ability to pay all its dollar-denominated debts, so the downgrade doesn't necessarily mean any economic trouble. However, it suggests that the downgrade is a sign that investors are losing confidence in the US's ability to pay its debts, due to the political situation. It's a warning that if the Republican party doesn't take action to protect the value of the dollar, then there could be trouble down the line.

Action items

Research the current political situation in the U.S. to understand the implications of the Fitch downgrade.
Learn more about the concept of Monetary Sovereignty and the implications of the U.S. government's infinite ability to create money.
Follow the news and developments related to the debt limit and the political situation in the U.S. to stay informed of any changes that may affect the U.S. credit rating.

Technical terms

Debt: Money that is owed by one party to another.
Treasury Bills, Bonds, and Notes: Types of debt instruments issued by the U.S. government.
Full Faith and Credit: A promise by the U.S. government to pay its debts.
Core Inflation: A measure of inflation that excludes volatile food and fuel prices, excise duties, income tax, and other financial investments.
Debt Limit: A legal limit on the amount of money the U.S. government can borrow.
Monetarily Sovereign: A term used to describe a government that has the power to create its own currency and is not dependent on credit markets to remain operational.
Benchmark Interest Rate: The interest rate used as a reference point for other interest rates.
Recession: A period of economic decline.
Credit Rating: A measure of the creditworthiness of an individual or entity.