We recently described what it would cost if we all paid off the entire Dutch government debt. Unfortunately, the amount that every Dutchman would have to spit out is enormous. But the United States is in even bigger trouble because the national debt is much higher there. This is bad news for Americans, but there is a bright spot in the problem.
The debt of the United States is huge
The US Debt Clock website allows you to track exactly how high the US national debt is at any time. Currently it is already more than 32.7 trillion dollars. According to the Organization for Economic Co-operation and Development (OECD) the ratio of government debt to gross domestic product (GDP) was 144% at the end of 2022.
Since then, the economy has grown somewhat, while debt has grown even faster. Finally, the US debt ceiling was raised urgently, and with good reason. The debt ratio should therefore even be above 144%.
The US population is estimated at over 340 million people. If we assume $32.7 trillion in debt, that means each American would have to pay off about $97,500. That’s just not possible.
Only for the dollar, but good for bitcoin
The enormous debt has a good side and a bad side. The good news is that this repayment is not mandatory. That would have devastating effects on the economy – even if everyone worked unpaid for a year, the debt would still not be paid off.
That means lots of money needs to be printed to pay off the debt, and luckily it’s possible. However, this is usually not positive for the national currency, as it then loses value compared to other goods, services and financial products.
It could be good for Bitcoin (BTC) and other cryptocurrencies. Bitcoin was created in some ways as a solution to the central bank printing new money. There is a fixed supply: there will never be more than 21 million BTC in the world. It is therefore considered an excellent solution against the money printing of the central banks.
The US dollar and Bitcoin have also often shown a high negative correlation to each other in recent years. This means that if one value increases, the other value decreases and vice versa.