The US debt mountain has been climbing at a worrying rate for years. After breaking the $32 trillion mark on June 15, it has now added $246 billion, according to the latest dates of the Ministry of Finance. The debt is currently growing to such an extent that the US Congressional Budget Office (CBO) is out loud express his concerns about the situation.
Big risk to the economy
According to the CBO, the situation is extremely worrying and the government deficits of the United States will only increase in the coming years. “Towards the end of 2023, Federal debt as a percentage of gross domestic product will reach 98 percent. Debt-to-GDP is increasing: this rate will surpass its current peak in 2029, when it reaches 107 percent of GDP and rise to 181 percent of GDP in 2053,” the CBO said.
According to the CBO, this gigantic and increasing mountain of debt will cause economic growth to slow down and America to spend more and more money on interest payments. Especially now that interest rates are slightly higher due to the Federal Reserve’s fight against inflation over the past 15 months.
During that period, the US central bank raised interest rates by about 5 percent from 0 to the current range of 5.00 – 5.25 percent.
The CBO also expects a government deficit of 5.8 percent of GDP for the US government this year. Towards 2053, they see that deficit increase to 10 percent on an annual basis. That level has only been surpassed during World War II and the abrupt explosion of government spending during the COVID-19 pandemic.
What does this mean for Bitcoin?
What this means exactly for Bitcoin is difficult to predict. Ultimately, we can only speculate about the impact of such matters. For the time being, this seems to be a positive development for the value of Bitcoin.
After all, Bitcoin is especially attractive because of its absolute scarcity of 21 million units. The continuous increase in the US government debt means that more and more dollars are coming into circulation.
While there is less and less Bitcoin in circulation, the relative scarcity of the US dollar is actually declining. The faster the US dollar loses purchasing power, the sooner people will look for alternatives.
All in all, we can say that we as Bitcoiners should have little to nothing to complain about America’s rising government debt. This is indeed a problem for the global economy (in the long term), but ultimately it will (most likely) push more people towards Bitcoin.
