Fitch Corp debt rating agency this past week down graded US $34T debt in historic decision, from AAA to AA+, meaning the Federal Reserve will now have to raise rates even further to cover US accelerating deficits and national debt level. US annual interest on its debt payments now exceeds $600B and soon $900B/yr. as Fed now has to raise rates not just to slow inflation but to pay higher interest on growing deficit & debt. Higher rates need also in order to attract more global buyers of US Treasuries, as China and other countries continue to reduce their purchases of US debt. What this means is the crisis is US fiscal policy is now deepening, along with the intensification of contradictions in US monetary policy (Fed must rate hikes higher to significantly dampen inflation but risks exacerbating the regional banking instability as higher rates create more interest rate risk. (The show concludes with comments on latest US jobs report, showing virtually no change in the July report from June)
Listen to my analysis of the growing crises & contradictions in US fiscal and monetary policy in my August 4 Alternative Visions radio show.
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Dr. Jack Rasmus @drjackrasmus









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