I’m a United States citizen. Moody gives the US a AA+ credit rating (it was downgraded from AAA in 2011).
How can this be, despite the substantial amount of debt the US holds that only continues to grow?
Is it GDP, defense capabilities, the dollar being the de facto currency almost worldwide? A combination of these? Or is there another huge factor(s) I am missing?
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The govts relationship with the word “debt” is very different to yours or mine. This is on account of the fact that the govt creates the money needed to pay its debts. And they do this ALL the time.
Think of where money comes from. Its a human construct – we dont dig it up out the ground like a commodity, so someone has to have created all the money in circulation. That someone is the govt. Every time a govt spends, it does so through new money creation. Not tax. Not borrowing. Creation of new money. Indeed, there is no mechanism within the central bank to spend any other way.
Once the govt spends its new money, it then taxes back some of it in order to control inflation, control behaviour (taxes on alcohol, fuel, cigarettes etc), and make more fiscal space for further spending.
The national debt is the sum total of every unit of currency spent by the govt and not yet taxed back. It is nothing to be worried about and will continue to rise indefinitely.
I hugely recommend picking up The Deficit Myth by Stephanie Kelton. It tackles this topic in a really easy to understand way and lays waste to many of the myths surrounding the money system.
Also, ive deliberately chosen not to specify dollars, pounds, or any other currency in my post, because regardless of where you are, this is how things work for a currency issuing govt.
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