On Wednesday, September 24, the US Treasury announced its decision to approve a $20 billion financing package for the Central Bank of Argentina.

This amount would be primarily used for the purchase of primary or secondary debt of the South American country.

The US Treasury stated: “The Treasury is currently in negotiations with Argentine officials to establish a $20 billion swap line with the Central Bank.”

The negotiation involves working together with the Argentine government “to avoid excessive volatility,” stated Secretary Scott Bessent on the social media platform X, who met on Tuesday with US President Donald Trump and Argentine President Javier Milei.

He added: “The United States is prepared to purchase public debt in the primary or secondary market, and we are working with the Argentine government to end the tax exemption for commodity producers who exchange foreign currency.”

M.Pino

Source: DW

(Reference image source: Jonathan Borba on Unsplash)

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The credit rating agency Fitch Ratings has lowered the long-term debt solvency rating of the United States one notch, which now stands at ‘AA+’ from ‘AAA’ with a stable outlook, as a reflection of the expected fiscal deterioration over the next few three years and the high and growing debt burden of the Government.

Likewise, the risk rating agency has explained that its decision also takes into account “the erosion of governance” in relation to other sovereign issuers rated ‘AA’ and ‘AAA’ during the last two decades, as has been manifested in repeated confrontations about debt limits and last-minute resolutions.

In this way, Fitch has fulfilled its threat to lower the rating of the world’s leading economy, which it had placed on negative watch last May during the latest political crisis, in order to suspend the debt ceiling. Following the decision announced by Fitch Ratings, only Moody’s maintains the highest solvency grade for the long-term debt of the United States, after S&P Global downgraded the country’s rating in 2011.

In its analysis, Fitch has pointed to the fiscal challenges facing the United States over the next decade, warning that higher interest rates and rising debt stocks will increase the interest service burden, while an aging population and rising health care costs will increase spending in the absence of fiscal policy reforms.

In addition, the agency has warned that the 2017 tax cuts will expire in 2025, although there is likely to be political pressure to make them permanent, as has been the case in the past, resulting in higher deficit projections.

On the other hand, the risk rating agency expects that the US economy will enter a recession at the end of 2023 and the beginning of next year as a result of stricter credit conditions, the weakening of business investment and the slowdown in consumption. The agency expects US real GDP annual growth to slow to 1.2 % this year from 2.1 % in 2022 and growth to just 0.5 % in 2024.

Fitch’s decision is considered arbitrary

For her part, the US Treasury Secretary, Janet Yellen, has criticized Fitch’s decision to lower the US rating. “I strongly disagree with Fitch Ratings’ decision. The Fitch Ratings change announced today is arbitrary and based on outdated data,” Yellen said.

In any case, for Yellen, Fitch’s decision “does not change” the view of Americans, investors and people around the world about US Treasury-issued debt as the world’s preeminent safe and liquid asset. “The US economy remains the largest and most dynamic economy in the world, with the deepest and most liquid financial markets in the world,” he stressed.

Source: dpa

(Reference image source: Lukas Zischke, Unsplash)

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US Treasury Secretary Janet Yellen explained that investing in cryptocurrencies is a “very risky option” to include in the retirement plans of average American savers, and it would be reasonable for Congress to face the danger.

“It is not something that I would recommend to most people who are saving for retirement, (…) For me it is a very risky investment.”

The Secretary of the Treasury considers it “reasonable” that Congress regulates the type of assets that could be included in “retirement vehicles with tax benefits, such as 401 (k) plans (…)” I am not saying that I recommend it, but I think it would be reasonable,” she said.

Yellen made the remarks in response to a question about Fidelity Investments’ initiative to add a crypto option to the pension plans it manages.

Bitcoin as an option as a store of value

Last April, the American company specialized in asset management and pension funds Fidelity Investments announced its intention to offer 401 (k) with Bitcoin. However, savings programs in the United States have a fairly strict regulation, which is why the position established by the Secretary of the Treasury, nor that assumed by the Department of Labor, is not surprising.

For her part, Senator Cynthia Lummis believes that the position taken by the Department of Labor could be wrong. In her opinion, an “intelligent investment strategy combines assets that generate short-term profits and assets that can prevent the funds from depreciating.” In her words, Bitcoin is a very good option to avoid the depreciation of money. “BTC really shines as a store of value,” the senator indicated.

M. Rodríguez

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Source: buahmerahpapua.web.id

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