Hoenig warns US to preserve AAA rating

“Once there is a shred of doubt (over the rating) it is too late, says KC Fed hawk Tom Hoenig. That doubt would be reflected in interest rates, should it reach our shores, Hoenig says.

With US 10-year yields at 3.50%, there are no doubts at this moment…but that could change quickly.

Hoenig says that if the US does not reduce deficits soon, pressure will grow on the Fed to monetize the debt (print money) which would weaken the dollar.