The future of the United States faces enormous challenges, which will affect global stability and development. Recently, Moody's, an internationally renowned credit rating agency, issued a shocking statement announcing that the outlook for the U.S. sovereign credit rating was downgraded from stable to negative, which means that the U.S. credit rating is likely to decline further. Moody's justified the continued rise in interest rates in the United States, which has led to an increase in the debt burden, as well as the intensification of political divisions in the United States, which have affected the decision-making ability and efficiency of the United States. Both of these are serious political and economic problems that the United States is currently facing.
This statement by Moody's provoked a strong reaction from the United States. The US Deputy Secretary of the Treasury immediately disagreed with Moody's assessment, stressing that the US economy remains strong and that US Treasuries remain the safest and most liquid asset in the world. He tried to preserve the credibility of the United States, but is that really the case? Why did Moody's statement cause so much shock and concern?
First of all, it means that the last of the world's three major rating agencies has also lost confidence in the United States. Two other rating agencies, Standard & Poor's and Fitch, downgraded the U.S. sovereign credit rating from AAA to AA+ back in 2011 and 2023, respectively. Now, Moody's has also downgraded the U.S. rating outlook to negative, which signals another downgrade in the U.S. credit rating. This shows that the world's three most authoritative rating agencies are pessimistic about the future credit of the United States, so can investors still trust the United States? Can U.S. Treasuries Be Sold?
Second, the current debt of the United States has exceeded 33 trillion US dollars, a record high, and the debt pressure of the United States is very huge. In order to maintain existing spending, the United States has to constantly borrow new to pay off old ones, which requires more investors to buy US Treasury bonds. This is also the reason why relations between China and the United States have eased recently, and the US Secretary of the Treasury has personally visited China to promote US Treasury bonds and persuade China not to sell US Treasury bonds. But now that the last rating agency has also lost confidence in the United States, will the US Treasury still find a buyer?
Third, the current international geopolitical situation is very complex and uncertain, and black swan events are emerging one after another. In order for the United States to maintain its position as a global hegemon, it needs a lot of money. Not long ago, Biden announced that he would provide nearly $100 billion in military aid to Ukraine and Israel. Where does the money come from? Isn't it by issuing more Treasury bonds to increase debt? So, all of this needs to be supported by the sovereign credit of the United States. And now that credit is being questioned, it's hard to raise money. Therefore, Moody's statement will have far-reaching consequences for the United States.