Moody's U.S. Rating Downgrade Response

Moody's U.S. Ratings Downgrade Response on 6-30-2025

Standard and Poor's downgraded US credit rating in 2011. Fitch downgraded US credit rating in 2023. The writer wrote several responses to challenge those Downgrades. Now the writer wants to respond to Moody's US Downgrade. The freedom of speech encourages the free and open exchange of ideas the truth, sooner or later, would be exposed.

The 2025 Moody's US Credit Rating Downgrade affects the public. Since the Downgrade affects the public, the public has the right to see the Downgrade Report and makes possible responses. Moody's required register an account with them. After the writer login the account, the writer still couldn't find the Report. After weeks, the writer searched the internet and found other's comments with a link. The writer login Moody's account and did a copy and paste the link and the writer was able to read the Report. This hindering is not in alignment with DUE PROCESS. Although Moody's is not a government branch, Moody's should still respect the DUE PROCESS Clause of the US Constitution.

The purpose of bond's credit rating was to reflect the probability of going into default. As explained in the Fitch U.S. Ratings Downgrade Response, the effect of the key reserve currency factor together with the Former Fed Chairman Alan Greenspan's printing money factor was similar to a credit line. Basically, it was what Former Fed Chairman Alan Greenspan said that paying any debt by printing money. With the huge credit line, US should have AAA credit rating.

In Fitch Downgrade, Fitch chose several factors including the debt-to-GDP ratio and those ratios were not just bad but very bad when compared with 'AAA' median standard. With these chosen factors, Fitch can downgrade US any time Fitch likes. Let’s say, in year 1, US was in a very very bad condition based on Fitch’s chosen factors. How about in year 2, year3, year 4, …? US would be also in very very bad conditions based on Fitch’s chosen factors. The factors’ measure should be able to differentiate the US conditions but they didn’t. It only made sense that those factors chosen by Fitch were non-crucial factors.

The writer will look at Moody's US Downgrade based on those non-crucial factors and how Moody's counter argues the Former Fed Chairman Alan Greenspan's implied AAA credit rating. Below in black color are parts of the Moody's Downgrade Reports which the writer believes that they are related to the counter arguments. The writer's responses or comments are in blue color.

“Despite high demand for US Treasury assets, higher Treasury yields since 2021 have contributed to a decline in debt affordability. Federal interest payments are likely to absorb around 30% of revenue by 2035, up from about 18% in 2024 and 9% in 2021. The US general government interest burden, which takes into account federal, state and local debt, absorbed 12% of revenue in 2024, compared to 1.6% for Aaa-rated sovereigns.”

Here Moody's is talking about the demand for US Treasury assets, the yield or the interest rate and the debt affordability.

During the financial crisis, the yield or interest rate on existing Portuguese 10-year debt rose above 9%. At that time, some said that it was good news because there was demand.

According to Atlantic Council article, the US dollar represents 57% of official foreign exchange reserves, 54% of global export invoicing, and is used in 88% of foreign exchange transactions and data updated in January 2025. These demands for the US dollar are predominantly affected by outside factors, not necessarily directly affected by the US economy. The geopolitical environment plays an important role to the demand of the US dollar. In this case, the demand of the US dollar is driven by the supply and demand and they would determine the yield or the interest rate. What level of demand of the US dollar did Moody's forecast when Moody's made the statement that Federal interest payments were likely to absorb around 30% of revenue by 2035? The writer doesn't believe Moody's can make an accurate forecast for geopolitical environment or the demand of the US dollar in 2035.

Before the President Trump's Middle East trip, was Moody?s able to predict the $2 trillion in commitments from the Middle East countries?

Also, Moody's should change the phase "compared to 1.6% for Aaa-rated sovereigns" to "compared to 1.6% for Aaa-rated sovereigns with similar key reserve currency status." Without the added phase, it is comparing apple with orange.

“As a result, we expect federal deficits to widen, reaching nearly 9% of GDP by 2035, up from 6.4% in 2024, driven mainly by increased interest payments on debt, rising entitlement spending, and relatively low revenue generation. We anticipate that the federal debt burden will rise to about 134% of GDP by 2035, compared to 98% in 2024.”

Here Moody's is talking about the debt burden to GDP ratio.

Standard and Poor's downgraded US in 2011. At that time, the writer wrote several responses and sent emails to notify Standard and Poor's about those response. Also emails were CC to FDIC. In the Standard & Poor's U.S. Downgrade Response on 9-17-2012, it mentioned: "...the role of the U.S. dollar as the key reserve currency confers a government funding advantage..." The Standard and Poor's Downgraded report projected the debt to GDP ratio to 74% by the end of 2011. In the Report, U.K. with 80 % debt can be acceptable for 'AAA' long-term rating. Unless Standard and Poor's gave preferential treatment to U.K., Standard and Poor's US downgrade was a false downgrade.

Based on the Standard and Poor's US Downgrade Report, the selections of the debt to GDP ratio regarding the rating were highly subjective. Standard and Poor's chose the 74% of debt to GDP ratio and it was a false downgrade. What makes Moody's thinks that Moody's choice of 98% of debt to GDP ratio is right? The probability that Moody's choosing it wrong is higher than the probability that Moody's choosing it right because it was wrong before.

At that time, the last email that the writer sent to Standard and Poor's was to inform Standard and Poor’s that the writer had no funding and therefore there would be no legal action against Standard and Poor’s. The email was also CC to FDIC. The Standard and Poor's case has not gone through the court system and there is no case precedent. If it is legal proceeding, Moody's would have to prove that Moody's choosing is right. However, it is not. Standard and Poor’s said 74% of debt to GDP ratio and Moody’s said 98% of debt to GDP ratio. Moody's choosing 98% was right because Moody's said it was.

Since 74% of debt to GDP ratio was wrong, Moody's chose 98% of debt to GDP ratio. With a little bit luck, this time is right. So Moody's US Downgrade is based on luck.

Moody's mentioned the 134% debt to GDP ratio in 2035 but it didn't say anything which suggested that US wasn't able to use the huge credit line to pay it.

As for Former Fed Chairman Alan Greenspan's implied AAA credit rating, Moody's was fail to counter argue the huge credit line that US has and its ability to uses its credit line to pay any debts that it owed. Again US should have AAA credit rating.

Standard and Poor's and Fitch already downgraded US credit rating. The writer believes that Moody's wants to join the club. The writer believes Moody's should add 6 notches to the scale: AAAAAAAAA, AAAAAAAA, AAAAAAA, AAAAAA, AAAAA and AAAA. In this case, Moody's can downgrade US each year for six years. Would it affect the US credit stance? NO.

People may ask why the writer wrote those Standard and Poor's, Fitch and Moody's Downgrade Responses. The writer thinks the writer can and therefore the writer should. Obviously, until the writer no longer can.

Response on 6-30-2025

Sources:

Moody's Ratings downgrades United States ratings to Aa1 from Aaa; changes outlook to stable

Fitch U.S. Downgrade Response on 8-16-2023

No Chance of Default, US Can Print Money: Greenspan

Spain and Portugal raise funds at higher cost

Dollar dominance remains strong in reserves, trade, and transactions

Standard & Poor’s U.S. Downgrade response on 8-26-2011

Standard & Poor?s U.S. Downgrade Response on 9-17-2012