United States Credit Rating Cut, Again!

Rating agency firm Egan-Jones cut its credit rating on the U.S. government, citing its opinion that quantitative easing from the Federal Reserve would hurt the U.S. economy and the country's credit quality.  Further, in its downgrade announcement, 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 GDP but reduces the value of the dollar.  It also stated that such action by the FED increases the cost of commodities, which will pressure the profitability of businesses and increase the costs of consumers thereby reducing consumer purchasing power.  Further, it stated that from 2006 to present, the US's debt to GDP rose from 66% to 104% and will probably rise to 110% a year from today under current circumstances; the annual budget deficit is 8% of GDP.  In comparison, Spain has a debt to GDP of 68.5% and an annual budget deficit of 8.5% of GDP.

Folks, we are fast becoming a "Banana Republic."  Our national debt exceeds $16 trillion, which is more than our GDP.  Our federal deficits have exceed $1 trillion for each of past several years.  We have a Federal Reserve System that purchases 77% of all newly issued Treasury securities.  This same FED, which by the way is not an agency of the federal government but actually owned by commercial banks, continues to expand its balance sheet in order to support those mal-investements made by those "Too Big To Fail" banks.