The United States credit ratings has been downgraded on Barack Obama’s watch – again – this time by ratings agency Egan-Jones from AA- to AA.
Ben Bernanke’s election year liquidity pumping gambit, at Obama’s request, is blamed for the most recent embarrassing downgrade. Mitt Romney said Bernanke should not make the inflation-risking move, and has promised to replace Bernanke if elected this November.
All of this pumping is exactly the kind of policy Barack Obama claims to hate and claims that Mitt Romney loves. All the new money needs someplace to sit, so the stock market goes way up, benefiting the investor class. In return, prices go up, hurting everyone.
I love people getting rich off the stock market, but when people get rich off the stock market based on fake money, it’s not good for anyone, and a lot of those same people are at risk for getting creamed when it all comes crashing down.
In its downgrade, 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 gross domestic product, but reduces the value of the dollar.
In turn, this increases the cost of commodities, which will pressure the profitability of businesses and increase the costs of consumers thereby reducing consumer purchasing power, the firm said.