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?
In: 54
1) US is good at paying it’s debts.
2) US debt is denominated in US dollars. Whatever happens to the US dollars internationally, 1 dollar still pays off 1 dollar of debt.
3) Historically it see isn’t /that/ large. As I recall Great Britain ran a debt over 200% GDP for over a century.
1) US is good at paying it’s debts.
2) US debt is denominated in US dollars. Whatever happens to the US dollars internationally, 1 dollar still pays off 1 dollar of debt.
3) Historically it see isn’t /that/ large. As I recall Great Britain ran a debt over 200% GDP for over a century.
The US is a developed, gigantic, diversified economy that has always paid its debts. The world has a lot of trusts in the US economy, because even if it goes into recession or occasional crisis periods, it always bounces back. Not many countries (if any) can say this.
Countries like the US don’t go bankrupt. It too the UK 160 years to pay off the debt they ran up to win the Napoleonic Wars – and they were good for the interest the whole time.
Mind you – they did not have the modern Republican Party.
The US is a developed, gigantic, diversified economy that has always paid its debts. The world has a lot of trusts in the US economy, because even if it goes into recession or occasional crisis periods, it always bounces back. Not many countries (if any) can say this.
The US is a developed, gigantic, diversified economy that has always paid its debts. The world has a lot of trusts in the US economy, because even if it goes into recession or occasional crisis periods, it always bounces back. Not many countries (if any) can say this.
Countries like the US don’t go bankrupt. It too the UK 160 years to pay off the debt they ran up to win the Napoleonic Wars – and they were good for the interest the whole time.
Mind you – they did not have the modern Republican Party.
Countries like the US don’t go bankrupt. It too the UK 160 years to pay off the debt they ran up to win the Napoleonic Wars – and they were good for the interest the whole time.
Mind you – they did not have the modern Republican Party.
National debt is, almost, like personal debt in the sense that if you pay your debt on time every time, you will be deemed worthy of more credit in the future. Hence your credit will rating will go up.
This is extremely simplified but is in essence a major factor.
Nations are different from people. The US prints money. You will always get your debt paid, because the US will just print enough money to pay you, and there’s no conceivable way you would ‘refuse’ that payment. If you refused, they would laugh at you, and if you tried to force them, well you’d have to fight the US army.
Now, if Zimbabwe owed you say, 100 billion US dollars, there’s a pretty decent chance you would not accept the Zimbabwe currency they printed to pay you, as you might doubt your ability to exchange that 100 billion Zimbabwe currency to US dollars. If you were a powerful nation and Zimbabwe owed that money, you might even declare war to force them to pay.
So a nation’s debt it is strongly tied to whether they control a currency and if so, if people will accept it. It’s also tied to whether they can force you to accept the payment.
Latest Answers