Impacts of the Credit Downgrade

This chapter examines the fallout from the U.S. losing its AAA credit rating from Moody's, leading to increased Treasury yields and intensified calls for budget cuts from fiscal hawks in Congress. It delves into the political dynamics among various congressional factions as they navigate a new tax bill designed to promote economic growth amidst trade tensions. Additionally, the chapter discusses market reactions to this downgrade and the ongoing influence of bond vigilantes in shaping fiscal policy.

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