On a day of chaos overseas, the Egan-Jones ratings company just downgraded America’s credit rating again. They already cut Uncle Sam from AA+ to AA last April. Now it’s AA minus.
According to CNBC, the agency cited the freshly-announced third round of quantitative easing as a reason for the downgrade: “The firm said that issuing more currency and depressing interest rates through purchasing mortgage-backed securities does little to raise the U.S.’s real gross domestic product, but reduces the value of the dollar. In turn, this increases the cost of commodities.”
The Wall Street Journal’s Marketwatch relays some more cheery news from Egan-Jones: “From 2006 to present, the US’s debt to GDP rose from 66 percent to 104 percent, and will probably rise to 110 percent a year from today under current circumstances; the annual budget deficit is 8 percent. In comparison, Spain has a debt to GDP of 68.5 percent and an annual budget deficit of 8.5 percent.”