The US Just Got Downgraded: Why This Is Bad

"the repeated debt limit political standoffs and last minute resolutions have eroded confidence in fiscal management so there's a lot to unpack there and the real question is what does this actually mean in layman's terms why is this credit rating so important why did the stock market react so badly how does this affect the U.S as a country and consumers and investors as a whole"

"Fitch believes that U.S standards have been going down for the last 20 years and here's what they said in their official statement about why they did this there has been a steady deterioration in standards of governance over the last 20 years including on fiscal and debt matters"

"Fitch has indeed downgraded the U.S government's credit rating now this is only the second time it's ever happened the first was in 2011. it was historic then Fitch ratings downgraded the U.S debt rating from a perfect Triple A to a double A plus"

"the country now owes more than 32 trillion dollars and the debt keeps growing at an unsustainable level especially when you factor in interest rates"

"the government has to raise in order to approve increased spending now the debt ceiling is extremely important not just to the US but to the rest of the world because as part of that budget that includes interest payments on the bonds that other countries have with us unfortunately the US likes to wait until the very last possible second to raise the debt ceiling and approve more spending"

"the US has been downgraded and the dollar for all the push-packet faces Remains the world's default currency but America's dominant position is now under stress so this is huge the credit ratings agency just downgraded the US this is so rare that this is only the second time in U.S history that this has ever happened"

"if in the future we have a president who's running on the platform of being financially responsible and paying down the debt I don't know why I thought of Warren buff at that time but if they wanted to be responsible then this does increase the odds of higher taxes in the future"

"this downgrade is extremely small and if you look at any other Bond charts over the last few days you can see that bond interest rates did go up but only by a very small amount so yes on paper it does look like it now costs the government just a little bit more money to borrow more"

"when the U.S wants to borrow money it creates new bonds those bonds interest rates or yields are tied to Federal fund rates now this means that when a country's risk goes up like the US just did the country has to compensate investors by paying a higher interest rate because they're theoretically taking on more risk"

"despite this downgrade no one actually believes that the US would ever default on its debt and not pay its bondholders around the world just because one credit ratings agency said so"

"another direct downside we all feel right now though is volatility in the stock market now I'm filming this video on Wednesday but by the time you're watching this the stock market could have recovered or it could have fallen more because on Wednesday it fell seven percent but that's because that's the initial reaction of investors selling off their stocks because they're panicking and they don't fully understand what any of this actually means"

"in the long term it means we need to get our act together because our reputation matters if it didn't the rest of the world wouldn't want to buy our fun coupons and if no one wants our fun coupons and we have more at home that means hyperinflation which means paying 10 times more for things like milk eggs rent chicken things like that"

"there are now only nine countries in the entire world that have the perfect AAA credit rating score but the US is no longer one of them"

"the June bipartisan agreement to suspend a debt limit until January 2025."