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DENNIS PATRICK: NATIONAL DEBT |
Spend-aholic insanity is a lot like alcoholism. There is no question the US is financially bankrupt with a debt of trillions of dollars. We’re just not ready to admit it. To ease the pain we lapse into denial. A dose of reality would shatter that denial. The risk is not default on our national debt. Default would only occur if Treasury Secretary Janet Yellen chose not to pay the interest to creditors holding our debt. We barely have the monthly tax revenue to pay that interest. Besides, the US could always print more money – or raise taxes even more.
The real risk is the downgrading of the US’s financial rating by Moody’s and by Standard & Poor’s, the major credit rating agencies. If the US’s debt ceiling continues to increase but Congress and the president do not show a willingness to restrain the skyrocketing spending, the US’s credit worthiness becomes worthless. Downgrading the US’s AAA rating would ruin our financial standing around the world and the dollar would no longer serve as the world’s reserve currency. Decline in this status would take years to regain, if ever.
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