Soaring U.S. debt may start to overwhelm America’s ‘exorbitant privilege’

(Credit: Spencer Platt—Getty Images)

• Moody’s added to the growing list of U.S. debt warnings and appeared to inch closer to a downgrade in a recent report that sounded the alarm on the deteriorating fiscal situation. The ratings agency said that America’s AAA grade increasingly relies on “the unique and central roles of the dollar and Treasury bond market in global finance,” but that soaring debt and deficits are offsetting those advantages.

America has long enjoyed the “exorbitant privilege” of the dollar’s status as the global reserve currency, but worsening debt and deficits could soon outweigh that immense advantage.