Moodys Suggests U.S. Eliminate Debt Ceiling

Moody's Eliminate Debt Ceiling

As the U.S. Debt Deal is still being debated to work on a compromise to decrease the deficit while also raising the current debt ceiling to allow the United States to continue being able to pay its bills, the very nature of a debt ceiling, limiting the maximum debt a nation can reach, is also at debate. The United States is one of the few nations on the planet with a debt ceiling.

 

Most nations simply continue spending and printing more money to continue paying its debts to bond holders. Every time nations with a debt ceiling reaches its limit they are forced to pass a measure to raise the limit or risk default, which is the current situation in the United States.

 

Moodys, the ratings agency that rates nations and assign credit ratings suggested that the United States eliminate their debt ceiling. This comes just days after ratings agencies stated that if the United States were to default, their rating would be reduced from Aaa to Aa, with no guarantee of being raised up in the case of the default being fixed.

Moody's Eliminate Debt Ceiling

 

They brought up the notion that the debt ceiling limit is essentially non-existent anyways since the United States government has continuously raised it each time the previous ceiling limit was reached. Eliminated it would simple prevent any short-term default.

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