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Forward Guidance
Fitch's U.S Debt Downgrade Was Justified | Danielle DiMartino Booth
Aug 13, 2023
27:28
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Quick takeaways
- Fitch's recent AAA downgrade on U.S debt raises concerns about the country's debt levels and fiscal responsibility, especially as the US is running wartime deficits during a time of peace.
- While the US can print money to pay off its debt, excessive money printing can lead to inflation and depreciation of the dollar, highlighting the importance of responsible fiscal policies and debt management.
Deep dives
The Downgrading of US Sovereign Debt
Fitch has downgraded the US sovereign debt, making it the second credit rating agency to do so after S&P's downgrade 12 years ago. This downgrade is significant because the United States is considered the risk-free asset and the benchmark for the financial system. The timing of Fitch's downgrade is crucial as there is no major standoff or crisis happening within the country. This downgrade raises concerns about the country's debt levels and fiscal responsibility, especially as the US is running wartime deficits during a time of peace.
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Discover
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