This is not related to US solvency. It is related to Republican political gandstanding. Totally irresponsible.
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Aug 14 (Reuters) - Financial markets barely flinched when Fitch stripped the United States of its top credit rating, but it served as a reminder of longer-term structural risks investors in government bonds are yet to grasp.
Such risks are making some investors, including hedge fund manager Bill Ackman, bet on rising longer-term borrowing costs.
Without cuts to age-related spending, median net government debt will rise to 101% of gross domestic product in advanced and 156% in emerging economies by 2060, S&P Global Ratings said in a study this year.
But that reflects high domestic ownership of government debt and ultra loose monetary policy - a hard act to follow with higher inflation.
For example, the New York Fed estimates longer-term U.S. Treasuries still yield less than rolling over short-term debt - a legacy of central bank government bond buying.
"As the supply of long-dated Treasuries rises, investors may demand higher term premia to compensate for the added risk of holding bonds with longer maturities," Fichan said.
By the way, the link does not work.
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