US Loses AAA Credit Rating, Bitcoin and Gold Prices Expected to Skyrocket

The US has lost its AAA credit rating due to growing national debt and deficits. International journalist Michelle Makori suggests watching Bitcoin and gold, as their prices may skyrocket. The US national debt is $36.2 trillion, and the fiscal deficit is $1.05 trillion. Makori believes that during economic uncertainty, these assets often surge in price.

On May 17, 2025, Moody's Investors Service downgraded the United States' credit rating from "AAA" to "AA1," citing escalating debt and interest rates that are significantly higher than those of similarly rated sovereigns [1]. This marks the first time in over 100 years that the U.S. has lost its top-tier credit rating.

The U.S. national debt has reached $36.2 trillion, with a fiscal deficit of $1.05 trillion for the year [1]. Moody's noted that successive administrations and Congress have failed to agree on measures to reverse the trend of large annual fiscal deficits and growing interest costs.

The U.S. debt is primarily held by the public, which includes domestic and foreign investors. As of December 2023, the debt held by the public amounted to $27 trillion, or 79 percent of the total debt [2]. This figure represents the amount borrowed from outside lenders through financial markets to support government activities.

Domestic holders of federal debt have notably increased over the past decade, with the Federal Reserve being the largest holder. Other domestic holders include investment funds, commercial banks, state and local governments, insurance companies, and corporations and individuals. Foreign ownership of U.S. debt is also significant, with foreign investors holding $7.9 trillion, or 29 percent of the debt held by the public [2].

International journalist Michelle Makori has suggested that during economic uncertainty, assets such as Bitcoin and gold may surge in price. This sentiment is based on the historical trend where investors turn to safe-haven assets during times of economic volatility.

The U.S. debt situation poses several risks to the economy. High and rising levels of public debt can reduce private investment, increase interest payments to foreign holders, elevate the risk of a fiscal crisis, lead to higher interest rates, constrain lawmakers from implementing policies, and impede intergenerational equity [2].

Until lawmakers in Washington agree on a fiscally sustainable approach to the federal budget, public debt will continue to rise, threatening important safety net programs and domestic and foreign confidence in U.S. markets. This could potentially chip away at economic opportunities for Americans.

References:
[1] https://asia.nikkei.com/Business/Finance/US-loses-last-major-AAA-credit-rating-with-Moody-s-downgrade
[2] https://www.pgpf.org/article/the-federal-government-has-borrowed-trillions-but-who-owns-all-that-debt/