In 1989 Moody’s changed the credit rating of Brazil to BB- without a reasonable justification, causing enormous suffering and strife to the Brazilian population and government.

Moody’s and S&P, and most Americans, have yet to realize the concept of Real Interest rates, rather than Nominal Interest rates, which is a misleading pricing scheme. It misleads investors into thinking that they are receiving much more "interest" than they really are. In Brazil that would be a violation of the law.

During the last twenty years, Brazil always had the ability to pay the Real Interest rate of its loans, plus an extra for amortization. It never deserved the rating of "questionable ability to pay".

Now a Brazilian Rating Company has used the argument against the US Treasuries. Because they are not indexed to inflation "there is a questionable doubt that investor’s will receive the true value of their investment, due to future US inflation".

For 30 year treasuries, where a 4% inflation will erode principal by 50% at least, a double CC would have been more justified. But that would have seemed overreacting.

But it is about time the US realize that Nominal Interest Rates is a form of wrong measure, bad pricing scheme, because part of that interest is inflation, not interest. And inflation is not income by any means.

That is one the reason’s of the sub-prime crisis. Forcing poor people to pay "inflated interest rates" in the beginning of their life cycle, and paying totally eroded principal 30 years down the line.

Meanwhile inflation in Brazil is under control and the country today has the highest real interest rate in the world which makes it an essential investment in bonds in fixed income.