Check out this article from today's Financial Times (London):
AAA rating in doubt?
A few paragraphs:
Moody’s Investor Service, the credit rating agency, will fire a warning shot at the US on Monday, saying that unless the country gets public finances into better shape than the Obama administration projects there would be “downward pressure” on its triple A credit rating.
And this:
Pierre Cailleteau, head of sovereign ratings at Moody’s, said: “The size of debt makes the US vulnerable to an interest rate shock . . . but the level of fiscal ambition is not one that secures for sure the [triple A] rating.”
Moody’s worries that the government will struggle to get political agreement either to raise tax revenues significantly from their current low of 14.8 per cent of national income, or to cut federal spending far from its high of 25.4 per cent of national income.
If you are the least bit sanguine about this, my prediction is this: You don't have kids. Otherwise, you would be shell-shocked with outrage at the prospect of condemning them to a future of debt.
Proverbs 22:7 says "The borrower is servant to the lender."
Servant = Slave.
Is this what we want for our kids? Are we clueless enough about economics and debt to believe it can be otherwise if we continue current spending and borrowing, which is based on creating more and more government programs?
What happens if America's debt goes from AAA to AA?
Interest rates go UP. Housing values FALL. Inflation heats up, eroding purchasing power. Interest payments on the national debt go UP, eating away more and more of our dwindling "discretionary" income.
Ultimately, our kids get to work 6 months a year just to pay their tax bill to Uncle Sam.
Fight now.
As I read recently...
"Be heard, or be herded."
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