Analysis
Opinion

The US Credit Downgrade Explained

The US Credit Downgrade Explained
The U.S. Capitol looms behind flags on the National Mall in Washington on Nov. 7, 2022. J. David Ake/AP Photo
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Commentary

Bond ratings serve a massively important economic function. They signal to investors the quality of a debt instrument based on the likelihood that it'll be paid. The higher the rating, the more secure it is and the more certain it is to be a reliable investment. The lower it is, the more risk you take. Junk bonds, for example, can earn a huge return but one never knows for sure if the holders will ever see it.

Jeffrey A. Tucker
Jeffrey A. Tucker
Author
Jeffrey A. Tucker is the founder and president of the Brownstone Institute and the author of many thousands of articles in the scholarly and popular press, as well as 10 books in five languages, most recently “Liberty or Lockdown.” He is also the editor of “The Best of Ludwig von Mises.” He writes a daily column on economics for The Epoch Times and speaks widely on the topics of economics, technology, social philosophy, and culture. He can be reached at [email protected]
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