Judgment Day for the Dollar: Moody's Downgrade and the Looming Fiscal Apocalypse

No Fate But What We Make (and Borrow)

Alright listen up people. This isn't some sci fi movie anymore; this is real life. Moody's one of those credit rating agencies that probably uses algorithms Skynet would be proud of just downgraded the U.S. sovereign credit rating. Yeah you heard me right. They're saying we're not as good at paying our bills as we used to be. Apparently 'the future is not set,' especially when it comes to balancing the budget. For years they had our rating as Aaa the highest possible and now like a T 800 chasing John our rating has dropped one notch now Aa1. It's like when you realize the nice old lady next door is actually a cyborg assassin. Disappointing to say the least.

Hasta la Vista Baby... Savings?

So what does this mean for you the average Joe or Jane trying to survive in a world that's increasingly resembling a dystopian future? Well according to the eggheads at Moody's all the debt and interest is rising to levels that are significantly higher than similarly rated countries. And it's not just me saying it! All the major credit rating agencies continue to give the United States their second highest available rating. This downgrade is expected to lift the yield that investors demand in order to buy U.S. Treasury debt to reflect more risk and could dampen sentiment toward owning U.S. assets including stocks. Basically borrowing money is going to get more expensive and your savings might not stretch as far. Great. Just what we needed. More financial woes to add to the existential dread of a possible robot uprising.

Come With Me If You Want to… Pay Higher Taxes

The real kicker? Moody's is pointing fingers at the U.S. government. "Successive U.S. administrations and Congress have failed to agree on measures to reverse the trend of large annual fiscal deficits and growing interest costs," they said. Apparently nobody's figured out how to 'terminate' the cycle of debt. They're also saying that those tax cuts from 2017? Yeah if they get extended that's another $4 trillion added to the deficit over the next decade. That’s like giving Skynet the blueprints to our entire defense system. Idiots.

I'll Be Back... With a Bailout?

Peter Boockvar chief investment officer at Bleakley Financial Group says that Treasurys are still dealing with the fundamental factor of less foreign demand for them and the growing size of the pile of debt that needs to be constantly refinanced is not going to change but [Moody's] is symbolic in the sense that here's a major rating agency that's calling out that the U.S. has strained debts and deficits. So the value of bonds and the dollar will fall and the price of gold will rise in response. In early April Treasury yields rose and the dollar weakened against its global counterparts in reaction to Trump imposing high tariffs on imported goods coming into the U.S. a sign that investors could be starting to move away from the U.S. as the safest place in the world to invest. So what's the solution? More borrowing? More taxes? A daring raid on Skynet's central processing unit to steal their financial algorithms? I'm open to suggestions. Desperate times people.

The Future Is Not Set But the Debt Is

Look I've seen the future and it's not pretty. But even with killer robots and financial Armageddon looming there's always hope. We can still change things. We can demand fiscal responsibility from our leaders. We can invest in our future instead of burying ourselves in debt. We can learn to live without those extra large lattes and the latest gadgets. (Okay maybe not the gadgets. Gotta have something to fight the machines with.) But seriously we need to wake up and realize that our financial survival is just as important as our physical survival. And who knows? Maybe if we get our act together we can avoid both the Terminator and the taxman.

No Problemo... Right?

So next time you hear about the national debt don't just shrug it off. Remember every dollar borrowed is a dollar our children (or what's left of them after the robot wars) will have to pay back. And that's a future worth fighting for. Now if you'll excuse me I've got some serious shadow banking to learn. The future is not set but my retirement plan definitely needs some work. I need weapons and that requires funding.