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North Texas Objectivist Society (NTOS) Message Board › US May Lose Its "AAA" Credit Rating

US May Lose Its "AAA" Credit Rating

Old T.
Group Organizer
Dallas, TX
Post #: 909
The United States may be on course to lose its 'AAA' rating due to the large amount of debt it has accumulated, according to Martin Hennecke, senior manager of private clients at Tyche.

© 2008­
Plano, TX
Post #: 810
The United States may be on course to lose its 'AAA' rating due to the large amount of debt it has accumulated, according to Martin Hennecke, senior manager of private clients at Tyche.

© 2008­

Oh my.
I think what is ironic is that what people should be doing is paying down their debt and shoring up their personal savings - yet that is what the government told people NOT to do when they sent out all those stimulus checks.
They should have just sent out Wal-Mart gift cards.

Now Obama is talking about a new stimulus package. I am not surprised the US will be downgraded - it is appropriate. I just wish that people would take the economic situation as a reminder that people (and government) need to stop spending more than they have.

By the way - here is an interesting site:
The guy that runs it has some very good blog articles - sure, sure - some things are extreme, but for those looking for some ideas (or a reality check), I found it is an interesting website to read a few times per week.
A former member
Post #: 227
The issue of the US losing a AAA rating is extremely severe. It could lead to US Bankruptcy. If this were occur, all our cash would, in effect, be worthless.
Plano, TX
Post #: 813
So - what's next? More taxes? Do you think the US can sell enough bonds to save the rating to get more cash?
It is a scary situation indeed. But is the article/interview just scary speculation of worst case scenario, or is the US really that close to losing an AAA rating?
A former member
Post #: 4
I have to say I don't understand why anyone would invest in US Savings Bonds or T-bills. Is there something I am missing? I am not talking from a Objectivist/philosophical level. I am talking from a math perspective.

Current rates are so low (and have even been zero once or twice) that they are not even close to inflation rates.

I don't even understand the broken theory behind this. I guess I get that they are trying to "discourage savings" and "encourage spending/market play". But the other side of the same Treasury Department is writing zillion dollar checks. Even if I temporarily swallow the collectivist theories I still don't get where they think they are headed.

Is there some incentive I am missing? Like some sort of tax benefit or large institutional/governmental investment benefit?
A former member
Post #: 228
The issue, at the moment, isn't return it's safety. I moved a large amount into cash and T-Bills before the Oct meltdown. I did think not because of the return, but because it was a move of last resort. Other than holding physical gold, it's the last place I can "protect" wealth. Investors are trying to protect liquid reserves until the market bottoms and we can get back in. If the US Gvmt goes belly up, then even our T-Bill and cash reserves are WORTHLESS. (They pretty much are now).

How close is the worst case scenario? I have no idea. But keep this in mind, the type of leadership just elected in this country is far more concerned about CONTROL than they are GROWTH.

Another fact...guns and ammo are flying off the shelves. I went to two stores yesterday, at the second I was looking down the fishing asile and a salesman came up to me and asked if he could help. I replied I was fine, and he told me he was looking for something to do to get away from the gun department. I asked why. He replied that they had been swamped ALL DAY, he was about out of .40 & .45 ammo. And that was the SECOND stop of the day. The first stop was just the same. Now if that doesn't tell you something I'm not sure what evidence will explain it more clearly. People are scared and are preparing for the worst, which means a complete, or close to complete, breakdown in social services and protection.

Bona Fortuna.
A former member
Post #: 229
I finally managed to read Friday's TIA Daily. Here is a small quote from Rob:

"We could be in Zimbabwe, which is about to set a record for the world's worst hyper-inflation, at an annual rate of 516 quintillion percent. At this point, of course, such figures become meaningless, because Zimbabwe's currency no longer qualifies as money. London's Daily Telegraph notes:

There comes a point, though, where the inflation rate makes little practical difference. "The economy just stops functioning or slows down very much," said Prof Hanke. "A lot of barter takes place. Money is not used as much or if it is, it's all foreign exchange."

This is a warning about what happens when a nation embarks on a systematic policy of government intervention in the economy. There is no limit to how much misery it can create."

Did you read in the Middle Ages. Money = worhtless. I told my financial advisor last week I thought we we're headed for a barter economy, and here is someone else referring to the same thing. Yes, of course, it's in Zimbabwe...for now. "The Roman Empire can't fall". "Lehman is too big to fail." "The Titanic is unsinkable."

It's all impossible until it happens, then reality is all too clear.
Plano, TX
Post #: 816
I hope it doesn't get to that.
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