Ron Paul: “America’s AAA Rating Not Worth Saving” Because “We Are Insolvent” | zero hedge.
Paul on whether the AAA rating is worth saving:
“Probably not. I think if you had a market evaluation on this issue, it should have marked down a long time ago. I always wonder about these ratings. Bond ratings before the crash three years ago were not very helpful. Sometimes I wonder whether this is more of a political theater to build up the fear. First, we won’t be able to write the checks for Social Security and the next thing there’ll be a down rating of bonds.”
“The market does the final rating. I think our solvency in our dollar is better rated by the price of gold rather than what Moody’s will say. In the short run, what Moody’s does will have an effect.”
On a potential situation where Moody’s cuts the AAA rating and whether the U.S. can afford it given that entitlements and discretionary spending are already trying to be cut:
“That will move it along, but ultimately that is going to happen anyway because we are insolvent. We play along with this game with Social Security. We know it is insolvent. We know that if it were an insurance company, it would be in big trouble. It is true that this rating will have an effect, but it is a short-term effect. Ultimately, the fundamentals show this country is bankrupt.”
“If they do this, this will be very significant, but I think it is part of the game to make sure everyone is fearful so we continue this process. Long term, I think raising the debt limit is a negative because it delays the inevitable. It will give us much bigger problems down the road. Today and tomorrow, if Moody’s does not lower the bond rating, it will be helpful in the short run. In the long run, it will be more devastating because Congress will go back to their old habits again.”
On whether the tradeoff in favor of the AAA rating is worth making:
“On the short run it is, but in the long run it makes things worse.”
GoldnotHoney 