…well duh? What exactly took them so long? Did they finally hire some aspiring rocket scientist who can add, subtract, divide and connect more than 2 dots? Even little kids understand that after they spend their allowance, they are OUT OF MONEY!
So this is what the world has boiled down to. What would have been considered complete lunacy just 10…or even 5 years ago has become not only accepted but demanded! Please, repeat after me…We need more QE…PLEASE we need more QE! How ridiculous. The world has gone collectively mad. Perception has become …without more QE the financial world will come to an end…which sadly is TRUE! If they don’t print more, the upside down pyramid will collapse, however, if they do print more the currency itself is destroyed.
Please keep in mind that “printing” today is not actually printing on pieces of paper. No, it is the creation on new debt which in turn creates more new “money”. The problem as we all know is that at some point there becomes more debt than can be paid back…which is exactly where the U.S. government has already arrived. So on the one hand there is the absolute need for more debt and on the other hand we have the “sane analysts” at Moody’s belatedly telling the truth that there is already too much debt and that …forget about adding more debt, there is a need for LESS debt versus GDP.
This is a no brainer folks, the credit rating will, MUST in reality be downgraded. As has been said many many times, “inflate or die” and “QE to infinity”. It comes down to either printing and prolonging the death of the financial system or becoming fiscally responsible and pushing the economy over the edge. It comes down to, which do you sacrifice? The currency or the financial systems and economy. I assure you that history shows which choice is ALWAYS chosen for political reasons. The currency will be sacrificed so that the U.S. does not “default” on it’s debt.
It is this distinction that you will never ever hear Moodys or S+P speak of. They will never tell you that the currency (being fiat) will be the sacrificial lamb and given up. What a complete joke it is that interest rates have declined at all since the last downgrade last summer. You can either look at the debt itself OR the Dollar and know that receiving 1.6% for 10 years is not even close to compensation for the risk taken to lend. Easy, easy equation here…buy Gold…there is NO default risk at all compared the guaranteed default built into Treasuries!