The decision of Moody’s to downgrade the rating on debt of the United States government may not be a surprise. Fitch did something similar two years ago, and Standard and Poor’s did so in 2011. Then again, too, the ratings amount to what the Times calls a “political and economic repudiation of Washington” — coming, we would add, just as Congress is preparing to spend yet more money that it doesn’t have.

Moody’s had warned in March that a downgrade was coming, cautioning that America’s “fiscal strength” had “deteriorated” since the firm, in 2023, last gave Uncle Sam’s debt its top credit rating. Since then, Moody’s said, the nation’s fiscal health was on track for a “continued multiyear decline,” the Financial Times reported. These columns pointed to Moody’s warning as a reminder of the fact that America’s debt crisis is intertwined with a monetary crisis.

Viewed through that lens, the surging national debt — $36.2 trillion in total, of which some 80 percent, or $29 trillion, is held by the public — is “a symptom of the fiat money era,” the Sun in March explained. Historically, America’s dollars were convertible into gold at a rate set by law. That requirement imposed a fiscal and monetary discipline on the federal government that prevented large budget deficits and the runup of the astronomical debt seen today.

In 1971, the year Nixon abandoned America’s obligation under the Bretton Woods agreement to exchange dollars held by foreign governments for gold at the rate of a 35th of an ounce, the debt stood at some $412 billion, a little more than a third of the gross domestic product. Since then, the dollar has plummeted in value to less than a 3,200th of an ounce of gold, and federal debt now exceeds America’s annual economic output measured in GDP.

The untenable nature of this situation is thrown into sharp relief now that Moody’s has become the third rating agency to downgrade America’s credit. The ratings cut reflects “deepening concern,” as Bloomberg puts it, that the “ballooning debt and deficits” are going to “damage America’s standing as the preeminent destination for global capital and increase the government’s borrowing costs.”

One would imagine that President Trump and Congressional Republicans, who are currently embroiled in negotiations over  budget and tax legislation, would seize the moment presented by the downgrade to chart a course toward closing the federal budget deficit and get the national debt moving down. Yet some on the right are instead, in effect, shooting the messenger. Feature the remarks by a White House spokesman, Kush Desai. 

Rather than acknowledging the urgency of the debt crisis, Mr. Desai instead stresses the fiscal challenges bequeathed to Mr. Trump by his predecessor — “Biden’s mess,” he calls it — and suggests that Moody’s had political motives. “If Moody’s had any credibility, they would not have stayed silent as the fiscal disaster of the past four years unfolded,” Mr. Desai contends. Federal profligacy, though, is a challenge that transcends partisan divisions. 

That message comes through in Moody’s appraisal that “successive U.S. administrations and Congress have failed to agree on measures to reverse the trend of large annual fiscal deficits and growing interest costs.” It’s a mark of the failure of Hill Republicans to take this problem seriously that the “one, big beautiful bill” making its way through Congress is now expected to add some $4 trillion to the already dangerously large national debt. 

A more responsible approach, advocated by the GOP’s conservative wing, would be to curb the federal overspending that has fueled the debt and brought America’s credit into question. Real progress on resolving the debt crisis would also require a look at the fiat money system in place since the 1970s. That, after all, is the regime that has enabled Uncle Sam to borrow so many trillions of dollars that are increasingly worthless in terms of the real basis of value: Gold.