America’s $34 trillion debt crisis is good for Bitcoin
THE ballooning US debt has sparked increasing concern on Wall Street, prompting serious economists and financial experts to sound the alarm.
But Nobel laureate Paul Krugman in a New York Times op-ed last week says the $34 trillion of debt owed by the United States, the world’s largest economy, is of no concern. Really?
Krugman attempts to quell fears by drawing historical parallels, noting that while the astronomical level is indeed a record, its share of GDP mirrors levels observed at the end of World War II.
He contends that such levels are not unprecedented and fall below the debt burdens of countries like Japan and the UK, neither of which succumbed to a debt crisis, as governments can just print more money.
This nonsensical approach pits him against Wall Street bosses like Larry Fink (BlackRock), Jamie Dimon (JPMorgan), and Brian Moynihan (Bank of America) who are sound cautionary notes, underscoring the potential risks associated with the rapid escalation of US debt.
Even Treasury Secretary Janet Yellen recognised in May that the outlook for higher rates over the long term will make it harder to keep deficits and debt expenses under control.
Adding weight to these apprehensions, the IMF warns of significant risks to the global economy stemming from the surging US national debt. With projections indicating a fiscal deficit of 7.1% in 2025, well beyond levels observed in other advanced economies, the IMF underscores the potential for sustained high inflation fuelled by expansive fiscal policies.
In the face of these mounting concerns, Bitcoin is comg out as an increasingly attractive option for investors seeking refuge from the uncertainties surrounding traditional financial markets.
Unlike fiat currencies subject to government manipulation and inflationary pressures, Bitcoin offers a decentralized and finite alternative. Its scarcity and resistance to censorship make it immune to the risks associated with excessive debt and loose fiscal policies.
Also, Bitcoin’s non-correlated nature makes it an ideal diversification tool in investors’ portfolios. As apprehensions about the stability of traditional assets escalate, the crypto’s role as a hedge against inflation and economic uncertainty becomes more pronounced.
The IMF’s warning about upward pressure on global interest rates and the dollar further bolsters Bitcoin’s appeal as a hedge against currency devaluation and geopolitical risks.
Krugman’s assertion in the New York Times that the US being $34 TRILLION in debt is probably nothing and that we all need to move along is disingenuous and, frankly, wrong.
It is, however, good for those who are paying attention to Bitcoin and other digital assets.
Nigel Green, deVere Group CEO and founder
