And for that reason and some others, like the mismanagement of U.S. Debt levels and the U.S. Economy and the Federal Reserve and the U.S. Treasury and the SEC and the FBI and… see where all this is going? Because I do. We’re going to be facing a major downgrade of U.S. Treasury debt, that’s U.S. Treasury paper for short. There’s no possible way our debt doesn’t face a downgrade from the major bond raters like Standard & Poor and Moody’s and a few others. Why you ask? Because Woke’s have been controlling our government, a.k.a. this Socialist Movement insures any debt we face will be extremely difficult to grow out of. In other words, we’re fresh out of Unicorns people! 🙂

The U.S. economy, along with being in short supply of a ton of items, is just about out of Unicorns also, you know that whimsical magical Socialist ideology touted by Democrats which never materializes? Have you ever baked a cake that didn’t rise? I’ve seen this happen though I have yet to bake my first cake [in life]. Anyway, when that puppy comes out of the oven that’s not something anyone wants to eat, or decorate. [As a side one of my goals in life is to never have to bake a cake, I especially wouldn’t want to leave one out in the rain or anything…] 🙂

But back to the matter at hand here – there’s no possible way to grow out of this amount of record debt running an economy on pure Stagflation, essentially producing annual GDP growth rates ranging from say, .5% to sub-2% per year. Doesn’t happen, and won’t happen, and the major rating agencies will come in and blow the whistle on these useless Socialists, calling them out for yet endless oversights. The interest alone on our current debt load would choke a few dozen horses [even Unicorns!]. So what can you do about it? Well, not a whole bunch other than recognizing it as a bonafide financial risk and staying away from long dated U.S. Treasury securities, which is the first thing that comes to my mind. Next, I wouldn’t be long in bond mutual funds either. The problem with bond funds is they are forced to make moves based on shareholder purchases and sells. So, if they’re faced with large redemptions that means they will have to liquidate part of their portfolio to accommodate those redemptions. They may have to sell paper you wouldn’t have wanted them to sell, and even at a market loss just to raise cash. Best to buy individual short term paper if you’re going to dabble in the U.S. Treasury market. Once the downgrade occurs I would be willing to bet that it sends [wake-up calls], or ripples through really, all financial assets in a mostly negative way. There might be an asset class that would rally on such news but I would think these to be hard assets only, or physical commodities, which outperform in higher interest rate, higher inflationary environments. In other words, an attribute that’s really not good overall for the U.S. economy. Always remember, when you’re investing in gold as an example, you are placing a bet AGAINST the U.S. economy.

The last time U.S. government paper faced a downgrade was August, 2011 and it was pure ugly. Barry Obama was President at the time, another Democrat, are you surprised? All corporate entity paper was scrutinized once U.S. Treasuries were downgraded. You know why? Because the rating agencies took a stand effectively stating that no entity’s bonds could be rated higher than a U.S. Treasury security. What the? How obnoxious is that! Seriously? You mean that every stout and healthy corporation’s ability to borrow money has to suffer because our elected officials in Washington [some were Republicans but ALL the Democrats] can’t stop spending money they don’t have? I couldn’t believe the logic behind the notion but this is fact. The result was, and I’m not kidding, any corporation whose paper was given the highest rating, a AAA for example, was adjusted down to a AA or even a AA+, just so U.S. Treasury debt could be rated at or above even the least risky American corporations. It was ludicrous in my opinion, but expect a repeat of this to happen once again. What isn’t clear is just how low the rating could decline. For example, will it fall from AAA to AA, or even AA-? We won’t know in advance, it depends on the ability of the U.S. Treasury to pay the money back into the future and that depends on a host of factors, one being a constant stream of healthy tax revenue. But how do you produce healthy tax revenue when the U.S. economy is absent of robust growth? See where I’m going with this now? To summarize, there’s logic then there’s Washington logic and these two don’t always converge. 😉