Today, once again, we hear a second warning from Moody’s that the United States is close to loosing its Triple-A bond rating, if fiscal deficits and heavy debts are not effectively managed. The first warning occurred back in June.

I am not a fan of the Congressional Budget Office (CBO), because I have yet to find a single example when their reports did not have to be revised. The Office has a history of overstating revenues and understating expenses. So when the CBO states the current national deficit is 53% of the GDP, I pray they are overstating.

If the figure of 53% is a true fact, it means that of all the services and products produced in this country; over half is owed.

Many economist are calling our National Debt the Dollar Bubble.

Advisors in the Obama administration has dismissed the Moody’s report. One of the advisors, Austan Goolsbee stated, “it’s rather obvious that the U.S. government is not in danger of default.”

Any first semester financial student knows that a minor reduction in bond rating does not mean the US is in immediate danger of defaulting on its loans. It just means that the continued direction of increasing debt over revenues puts holders of American bonds at a greater risk of not receiving payment on time. However, it means any future US debt will cost more per dollar.

The situation is similar to a household in which one of the spouses spends more than the income of the household. Their credit rating, score, will start to fall. Any additional credit they may be able to get will cost them more. At some point in time they will not be able to get any additional credit.

How will a lower Moody’s rating affect the citizens of the US? If you have credit cards your credit limit will be reduced and interest rates increased. To finance a new car or home will require hugh downpayments. Cost of almost anything you purchase will increase, because the value of the American Dollar will fall. Not only will imported electronics cost more, you will be expected to pay cash. This will create a lower demand for goods, increasing unemployment. Caps will be placed upon social programs. It means the working American will bring home smaller paychecks, because higher taxes in attemp to bring down the debt.

Within hours after the Moody’s report that the US is on a course of unsustainable spending, President Obama announced additional spending of Tarp II funds for jobs.