Geithner: We'll Never Lose Our AAA Rating
*sigh* Remember this is also the guy who said "a strong dollar is our priority" and subsequently issued record amounts of Treasury debt to fund everything from car company bailouts to bullshit "job" initiatives. Dear Timmy, don't do us any huge favors and for the love of God, please step away from the credit card.
The risk the U.S. economy will slip back into recession is lower now than at any time in the past year, U.S. Treasury Secretary Timothy Geithner said on Sunday, while conceding that recovery will be slow and uneven.
In an interview on ABC News' "This Week," Geithner dismissed concerns that rising U.S. indebtedness might put pressure on the United States' prized triple-A credit rating.
Credit ratings agency Moody's last week warned that anemic U.S. growth, on top of already stretched government finances, could put pressure on the country triple-A status.
"Absolutely not," Geithner said when the interviewer suggested rising debt levels could put pressure on the top-notch rating. "That will never happen to this country."
Meanwhile, back here in reality:
It is unclear how the 2009 budget deficit was financed. A likely source was the bank reserves created for financial institutions by the Federal Reserve when it purchased their toxic financial instruments. These reserves were then used to purchase the new Treasury debt. In other words, the budget deficit was financed by deterioration in the balance sheet of the Federal Reserve. How long can such an exchange of assets continue before the Federal Reserve has to finance the government’s deficit by creating new money?
via Altheo News.
The clock is ticking.