'Shark Tank' star and O'Leary Ventures chairman breaks down what Fitch's downgrade of the long-term U.S. rating means for the economy and Americans' loans.
KEVIN O'LEARY:
There is no way to sugarcoat this at all. It's bad. And I'll tell you how you measure it's bad. Basically, when you, which is what this downgrading is, you are losing a little faith in the U.S. dollar and the U.S. Treasury bill because the default currency of the world, defined by every commodity priced by U.S. dollars, is the good faith of the U.S. government and the whole world. Trust it. Most sovereign funds keep the majority of their liquidity in U.S. dollars.
Now, how does this actually affect the next 24 months? Well, let me explain. Think about the CHIPS Act and the . We're printing billions of dollars. Government claims it has merit. It's important to do this. But at the same time, that's just a lot of spendingand that increases the deficit. And that's why Finch did this. They downgraded it. And I wouldn't say it was the two bills that caused the camel's back to be broken, but it was enough for them to say, OK, I've seen enough now for me and you or anybody.
The ratings agency pointed the America's"erosion of governance," rising deficits, and tightening by the Federal Reserve. It also said its expects the U.S. economy to slip into a mild recession in the fourth quarter.
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