Despite being awash in red ink - to the tune of more than $14 trillion - the United States has managed to retain its AAA credit rating, which is the highest rating available. But at least one economist thinks that is more about smoke and mirrors rather than a rating based on solid financial numbers. Martin Weiss, president of Weiss Ratings, said in an interview with financial newswire service CNBC.com last week that the nation's sovereign debt rating should be more like a "C." "A 'C' is equivalent to approximately a triple-B on the S&P, Moody's and Fitch scales. It's two notches above junk and one notch above the equivalent of a single A," Weiss said. http://www.naturalnews.com/032355_US_debt_rating.html
How do you rate debt when more debt can be created out of thin air, when dollars are nothing more than pieces of paper that facilitate exchange, when taxes can be raised to pay interest on this "debt?" Rating something like this is meaningless. The only true measure of the quality of the paper, that represents currency, is inflation. The free market is always the final judge. Moody's, S&P, and even Weiss are just spewing meaningless rhetoric.
So if one were to take the value of all the land that is the US, the buildings on it, the aircraft carriers and all other war machines, all the cars, trucks, etc., and all the GDP that is produced, that figure is less than $14 trillion of debt outstanding? Is that what he is trying to tell us? Free market is telling us: 10 year yield, sub 3%. It's safe!
Certainly! If amazes me that the American people will stand by as our government prints money out of thin air to pay debts, then asks us to pay taxes to help pay those debts. I firmly disagree with the policy!
If my interest and principal are paid back with dollars that are worth half of what they were when I bought the bond I consider that to be equivalent to a default. It is no different than if I was paid back with dollars that hadn't lost value but only at 50% of par. So sure, the government can always print more money but if it creates enough inflation that's a default. As for raising taxes enough to cover the deficits, good luck with that. People are not going to stand for a doubling of their income taxes. And the rich will just leave.
It's not meaningless when you consider WHO ultimately buys the majority of 30 year T-Bonds (and its impact on yield to entice). Wun hung lo.