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What is your point? The meaning of the downgrade is, if the inflation rate is 2% then there's a risk that US doesn't pay its debts. Now, if US does pay the nom
by nandemo 15y ago
What is your point?
The meaning of the downgrade is, if the inflation rate is 2% then there's a risk that US doesn't pay its debts. Now, if US does pay the nominal debts as you assume, then you cannot assume the inflation rate is only 2%.
If paying the nominal debt guaranteed an AAA rate regardless of inflation, then every country in the world would have an AAA rate. Argentina would just print a lot of pesos and then buy US dollars with it. Europe would just print a ton of euros and Greece et. al. would have no problems.
- fauigerzigerk 15y agoIf paying the nominal debt guaranteed an AAA rate regardless of inflation, then every country in the world would have an AAA rate No, because creating peso inflation does not reduce Argentinas dollar debt. But dollar inflation does reduce the USA's dollar debt. Therefore it makes sense to rate the ability of Argentina to pay its nominal dollar denominated debt but it makes no sense at all to rate the ability of the US to pay its dollar denominated debt.
- deleted 15y ago[deleted]