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The reality is that the current trajectory is not exactly sustainable. So, for once, Moody seems to be doing its job. As to where they were for the past decade

The reality is that the current trajectory is not exactly sustainable. So, for once, Moody seems to be doing its job. As to where they were for the past decade or so ( lets charitably say they were still trying to figure out where things land post 9/11 ), when all those issues were allowed to fester, is not exactly a big secret. The simple reality is that US will need to go through a period of pain to correct some of those excesses. It will not be fun for anyone, which is why there is so much effort put forth to kick can down the road. And the part that really gets me is that congress is discussing cutting taxes, fed is being pressured to lower rates.. as if all those things were not at least a factor in the mess we are in now.

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toomuchtodo 1y ago
The reality is taxes must go up, and the bond market will force it to happen. You can’t keep issuing debt forever to steal from the future for today when all of the evidence points to lower future growth. Voters might be unsophisticated, but the bond market is not. > Bond vigilantes, who can bring fiscally irresponsible politicians to heel by unloading a country’s debt, may rear their head if Congress doesn’t show any appetite to bring the federal deficit under control. https://usafacts.org/government-spending/ https://usafacts.org/government-spending/ https://finance.yahoo.com/news/bond-vigilantes-killed-trump-reciprocal-110200094.html https://finance.yahoo.com/news/bond-vigilantes-killed-trump-... https://ghpia.com/wp-content/uploads/2024/07/Investment-Insight-The-Bond-Markets-Role-in-Shaping-U.S.-Fiscal-Responsibility.pdf https://ghpia.com/wp-content/uploads/2024/07/Investment-Insi...
- A4ET8a8uTh0_v2 1y ago
  << Bond vigilantes, who can bring fiscally irresponsible politicians to heel I don't want to give people ideas, but at the same time this is not exactly new to anyone following that set of news. During last EU fiscal crisis, EU came up with a novel approach to handling bond issues. Haircut[1]. [1]https://www.sciencedirect.com/science/article/abs/pii/S1057521920301113 https://www.sciencedirect.com/science/article/abs/pii/S10575...
  - toomuchtodo 1y ago
    Treasuries only receive the favorable yields they do because they were considered the safest asset in the world. Any indicator of potential haircut is going to cause a rapid (further) loss in confidence and a spike in yields, leading to a debt spiral. This is why there was a fear of the implications of DOGE controlling the Treasury payment system (BFS), potentially leading to non payment and default. The capital markets are built on a foundation of trust. If you want continued access to capital (and with debt at ~123% GDP, it should be obvious that the US has no choice but to have continued access to the bond market), you must respect the trust relationship. https://www.cbpp.org/research/federal-budget/doge-access-to-treasury-payment-systems-raises-serious-risks https://www.cbpp.org/research/federal-budget/doge-access-to-...
    - A4ET8a8uTh0_v2 1y ago
      I will admit that, at the time, I did not see EU debt holders accept it, but accept they did. I know that cultural differences in US may require a different approach that go beyond PR spin ala 'temporary refund adjustment' since there is money on the line, but I can't help but wonder if it is not coming anyway.
      - toomuchtodo 1y ago
        https://www.brookings.edu/articles/what-are-the-risks-of-a-rising-federal-debt/ https://www.brookings.edu/articles/what-are-the-risks-of-a-r... https://www.jpmorgan.com/insights/markets/top-market-takeaways/tmt-how-worried-should-you-be-about-the-us-debt-and-deficit https://www.jpmorgan.com/insights/markets/top-market-takeawa... https://www.pbs.org/newshour/politics/how-a-debt-default-could-affect-you https://www.pbs.org/newshour/politics/how-a-debt-default-cou...
- deleted 1y ago
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- aprilthird2021 1y ago
  Taxes must go up, on our shrinking young population (right as we deport more and more immigrants and dissuade new ones from coming here). Great, Japan here we come
  - toomuchtodo 1y ago
    https://www.visualcapitalist.com/a-visual-breakdown-of-who-owns-americas-wealth/ https://www.visualcapitalist.com/a-visual-breakdown-of-who-o... “For reference, the total net worth of all U.S. households is close to $160 trillion. The rich half (top 50%) own about $156 trillion (or about 98% of it). The poorer half only own about $4 trillion. Breaking down that top half even further, the top 1% (1.3 million families) owns about $49 trillion (or about one-third of the total share) by themselves. And going even further, about half of that $49 trillion is owned by the top 0.1%. That’s only around 136,000 households and includes all of America’s wealthiest people.” Tax wealth, not work, roughly speaking. With that said, stagnation is inevitable due to demographic dynamics. Historical economic prosperity was because of a demographic dividend that won’t be repeated in our lifetimes. https://news.ycombinator.com/item?id=43861997 https://news.ycombinator.com/item?id=43861997 (citations)
    - dgfitz 1y ago
      Wealth is taxed, there’s just a ton of loopholes. It should be illegal to borrow with stock as collateral. This makes tax avoidance really easy for wealthy people. Nobody needs as much wealth as the top 1%. Limits and incentives need to be put in place to essentially create a luxury tax. Stock buybacks should be disincentivized. Companies holding so much money in cash sitting on the sidelines (Apple) don’t stimulate the economy. The US has an embarrassing amount of money, it’s just all manipulated away from the market and the people.
      - toomuchtodo 1y ago
        The logistics can be argued elsewhere, I’m simply saying that is where you can tax; there is nowhere else of material value to. The majority of US households can’t even afford to survive, let alone face a tax burden. > For the bottom 60% of U.S. households, a "minimal quality of life" is out of reach, according to the group, a research organization focused on improving lower earners' economic well-being. https://www.cbsnews.com/news/cost-of-living-income-quality-of-life/ https://www.cbsnews.com/news/cost-of-living-income-quality-o... https://lisep.org/mql https://lisep.org/mql
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kevin_thibedeau 1y ago
Standard & Poor's and Fitch downgraded US credit years ago. Moody's is late to the party.
- alabastervlog 1y ago
  I take this as a signal they think there’s no way the other two are going to raise theirs again, and are maybe worried one of those will downgrade another step in the near future while Moody’s rating is still high, which might look bad for them.
actionfromafar 1y ago
The rating is also a reflection of what the rest of the world believes about the future of the US government. It's not solely about the numbers.
0x5f3759df-i 1y ago
We have the worst possible people in government for the financial environment the US is in. Not only are we already in a bad place with government spending/debt given the new world of high interest rates. We’re just going to blow many trillions of dollars worth of new holes in the budget. Then throw in the endless tariff stupidity and it’s all just bad, bad, bad.
oceanplexian 1y ago
Why is the phrase "reduce spending" never anywhere to be seen with these awful takes? The only solution is for the Gov to stop spending money it doesn't have. I don't know how you can insinuate that de-industrialization and taxes are a viable strategy without addressing the root of the problem. It would be like telling someone with a gambling problem that spending more time at the casino and less time at work would improve their finances.
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- lesuorac 1y ago
  > Why is the phrase "reduce spending" never anywhere to be seen with these awful takes? Because the government was running a surplus under Clinton and then decided to cut taxes and low and behold there's been a deficit since.
- Aloisius 1y ago
  Raising taxes to eliminate the deficit is how you convince the average person that spending cuts are required. There's little reason for a good chunk of the US, insulated from the true cost of spending, to favor spending cuts.
  - BirAdam 1y ago
    No one is insulated. If it isn’t taken from people directly, then people feel the spending in price inflation. Every time the government spends, they issue a treasury. That treasury is then used as the backing for loans from the FedRes to members banks. Those banks then lend a multiple of that. The real issue with spending cuts is that the public will not accept any reductions to entitlements, the poor won’t accept cuts to welfare programs, and the donor class won’t accept cuts to military spending. This means there’s zero political will to fix the situation.
    - Aloisius 1y ago
      Most people are quite isolated because things like inflation are indirect. Seeing the link between inflation and spending is hard when it's easier for the average person to just see covid or greed or trade wars or simply fed policy and assign blame there. The direct link between spending and taxes is far easier for people to understand. So instead, raise taxes by 20+%. Setup automatic tax adjustments to cover spending changes to ensure the debt shrinks every decade.

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toomuchtodo 1y ago

The reality is taxes must go up, and the bond market will force it to happen. You can’t keep issuing debt forever to steal from the future for today when all of the evidence points to lower future growth. Voters might be unsophisticated, but the bond market is not. > Bond vigilantes, who can bring fiscally irresponsible politicians to heel by unloading a country’s debt, may rear their head if Congress doesn’t show any appetite to bring the federal deficit under control. https://usafacts.org/government-spending/ https://usafacts.org/government-spending/ https://finance.yahoo.com/news/bond-vigilantes-killed-trump-reciprocal-110200094.html https://finance.yahoo.com/news/bond-vigilantes-killed-trump-... https://ghpia.com/wp-content/uploads/2024/07/Investment-Insight-The-Bond-Markets-Role-in-Shaping-U.S.-Fiscal-Responsibility.pdf https://ghpia.com/wp-content/uploads/2024/07/Investment-Insi...

A4ET8a8uTh0_v2 1y ago
<< Bond vigilantes, who can bring fiscally irresponsible politicians to heel I don't want to give people ideas, but at the same time this is not exactly new to anyone following that set of news. During last EU fiscal crisis, EU came up with a novel approach to handling bond issues. Haircut[1]. [1]https://www.sciencedirect.com/science/article/abs/pii/S1057521920301113 https://www.sciencedirect.com/science/article/abs/pii/S10575...
- toomuchtodo 1y ago
  Treasuries only receive the favorable yields they do because they were considered the safest asset in the world. Any indicator of potential haircut is going to cause a rapid (further) loss in confidence and a spike in yields, leading to a debt spiral. This is why there was a fear of the implications of DOGE controlling the Treasury payment system (BFS), potentially leading to non payment and default. The capital markets are built on a foundation of trust. If you want continued access to capital (and with debt at ~123% GDP, it should be obvious that the US has no choice but to have continued access to the bond market), you must respect the trust relationship. https://www.cbpp.org/research/federal-budget/doge-access-to-treasury-payment-systems-raises-serious-risks https://www.cbpp.org/research/federal-budget/doge-access-to-...
  - A4ET8a8uTh0_v2 1y ago
    I will admit that, at the time, I did not see EU debt holders accept it, but accept they did. I know that cultural differences in US may require a different approach that go beyond PR spin ala 'temporary refund adjustment' since there is money on the line, but I can't help but wonder if it is not coming anyway.
    - toomuchtodo 1y ago
      https://www.brookings.edu/articles/what-are-the-risks-of-a-rising-federal-debt/ https://www.brookings.edu/articles/what-are-the-risks-of-a-r... https://www.jpmorgan.com/insights/markets/top-market-takeaways/tmt-how-worried-should-you-be-about-the-us-debt-and-deficit https://www.jpmorgan.com/insights/markets/top-market-takeawa... https://www.pbs.org/newshour/politics/how-a-debt-default-could-affect-you https://www.pbs.org/newshour/politics/how-a-debt-default-cou...
deleted 1y ago
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aprilthird2021 1y ago
Taxes must go up, on our shrinking young population (right as we deport more and more immigrants and dissuade new ones from coming here). Great, Japan here we come
- toomuchtodo 1y ago
  https://www.visualcapitalist.com/a-visual-breakdown-of-who-owns-americas-wealth/ https://www.visualcapitalist.com/a-visual-breakdown-of-who-o... “For reference, the total net worth of all U.S. households is close to $160 trillion. The rich half (top 50%) own about $156 trillion (or about 98% of it). The poorer half only own about $4 trillion. Breaking down that top half even further, the top 1% (1.3 million families) owns about $49 trillion (or about one-third of the total share) by themselves. And going even further, about half of that $49 trillion is owned by the top 0.1%. That’s only around 136,000 households and includes all of America’s wealthiest people.” Tax wealth, not work, roughly speaking. With that said, stagnation is inevitable due to demographic dynamics. Historical economic prosperity was because of a demographic dividend that won’t be repeated in our lifetimes. https://news.ycombinator.com/item?id=43861997 https://news.ycombinator.com/item?id=43861997 (citations)
  - dgfitz 1y ago
    Wealth is taxed, there’s just a ton of loopholes. It should be illegal to borrow with stock as collateral. This makes tax avoidance really easy for wealthy people. Nobody needs as much wealth as the top 1%. Limits and incentives need to be put in place to essentially create a luxury tax. Stock buybacks should be disincentivized. Companies holding so much money in cash sitting on the sidelines (Apple) don’t stimulate the economy. The US has an embarrassing amount of money, it’s just all manipulated away from the market and the people.
    - toomuchtodo 1y ago
      The logistics can be argued elsewhere, I’m simply saying that is where you can tax; there is nowhere else of material value to. The majority of US households can’t even afford to survive, let alone face a tax burden. > For the bottom 60% of U.S. households, a "minimal quality of life" is out of reach, according to the group, a research organization focused on improving lower earners' economic well-being. https://www.cbsnews.com/news/cost-of-living-income-quality-of-life/ https://www.cbsnews.com/news/cost-of-living-income-quality-o... https://lisep.org/mql https://lisep.org/mql

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kevin_thibedeau 1y ago

Standard & Poor's and Fitch downgraded US credit years ago. Moody's is late to the party.

alabastervlog 1y ago
I take this as a signal they think there’s no way the other two are going to raise theirs again, and are maybe worried one of those will downgrade another step in the near future while Moody’s rating is still high, which might look bad for them.

actionfromafar 1y ago

The rating is also a reflection of what the rest of the world believes about the future of the US government. It's not solely about the numbers.

0x5f3759df-i 1y ago

We have the worst possible people in government for the financial environment the US is in. Not only are we already in a bad place with government spending/debt given the new world of high interest rates. We’re just going to blow many trillions of dollars worth of new holes in the budget. Then throw in the endless tariff stupidity and it’s all just bad, bad, bad.

oceanplexian 1y ago

Why is the phrase "reduce spending" never anywhere to be seen with these awful takes? The only solution is for the Gov to stop spending money it doesn't have. I don't know how you can insinuate that de-industrialization and taxes are a viable strategy without addressing the root of the problem. It would be like telling someone with a gambling problem that spending more time at the casino and less time at work would improve their finances.

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lesuorac 1y ago
> Why is the phrase "reduce spending" never anywhere to be seen with these awful takes? Because the government was running a surplus under Clinton and then decided to cut taxes and low and behold there's been a deficit since.
Aloisius 1y ago
Raising taxes to eliminate the deficit is how you convince the average person that spending cuts are required. There's little reason for a good chunk of the US, insulated from the true cost of spending, to favor spending cuts.
- BirAdam 1y ago
  No one is insulated. If it isn’t taken from people directly, then people feel the spending in price inflation. Every time the government spends, they issue a treasury. That treasury is then used as the backing for loans from the FedRes to members banks. Those banks then lend a multiple of that. The real issue with spending cuts is that the public will not accept any reductions to entitlements, the poor won’t accept cuts to welfare programs, and the donor class won’t accept cuts to military spending. This means there’s zero political will to fix the situation.
  - Aloisius 1y ago
    Most people are quite isolated because things like inflation are indirect. Seeing the link between inflation and spending is hard when it's easier for the average person to just see covid or greed or trade wars or simply fed policy and assign blame there. The direct link between spending and taxes is far easier for people to understand. So instead, raise taxes by 20+%. Setup automatic tax adjustments to cover spending changes to ensure the debt shrinks every decade.