Last month, CoinDesk discussed in detail how Bond Market Activity Challenging the notion that the US government is good for money, Increased questions to prolonged “kayfabe” or illusion of fiscal stability.
Today, the billionaire trader tech Elon Musk raised the alarm to x by his (perhaps deserving) Diatribe against the big, good tax on President Donald Trump, which is expected to boost the Fiscal deficit of $ 2.4 trillion More than ten years.
That happens at a time when the fiscal concerns are driving already driving Investors away from US possessions And in successors, such as Bitcoin and gold. Like FY 2024, the fiscal deficiency Stand in $ 1.8 trillion, and to this day, the national debt is at $ 36 trillion, with aNnual interest payment costs $ 1.13 trillion.
A person who is influenced and popular while the Musk taking fiscal concerns may result in two things: first, it can speed up the transition from US ownership. Is it just a chance that at a time like this, Corporate Treasury Adoption of Bitcoin and other tokens, including XRPIs it selected?
Second, investors who are concerned about the health of the government’s fiscal are likely to request a higher yield that suits inflation to lend money to the government. So, expect the yields to remain sticky in the higher parts, the more complex the fiscal situation and economic growth.
The government is bankrupt, at least in theory
Bitcoin
Believers, have warned this day for a long time. To show a former CoinDesk employee, “Crypto may not have all the right answers, but it asked the right questions.”
The popular narrative is that the US government is bankrupt, and The dollar is heading to a collapse. According to MuskThe government’s risk is losses if financial finances are not restored.
In theory, the government has been bankrupt for decades. That is evident from repeated lifts of the debt ceiling in recent years.
Congress sets the first limit of federal debt At $ 45 billion in 1939, which gives a widespread decision of the Treasury ark to use borrowing instruments as long as the total debt does not exceed the limited self -imposed limits.
Since then, the ceiling has been repeatedly hit and raised, a sign of fiscal crisis and, in many ways, forms of hiding losses. As of 2025, the debt limit stands for $ 36 trillion! That’s the right trillion.
It brings to my mind a joke of a comedian -India that stands out about government officials who artificially increase the risk mark during flooding, to create the illusion of control and normalcy.
Similarly, the repetitive increase in debt ceiling is an attempt to masqueize the country’s financial losses.
The Fiat -based Fiat system may break
For at least a decade, Bitcoin believers say the financial system has been broken and we need to fix “money” —It’s important Fiat-based money-based money.
And they may be right, like Government’s UTA-GDP ratios to the entire advanced world have increased last 100%It is a sign that Fiat’s Fiat -based Fiat’s ability to produce growth has collapsed.
Described by a blog post at the Mises Institute Debt -based money -based money (paper currency with a government seal supported by nothing) as follows:
“Government and powerful banks established a system in 1913 that usually works like this: every financial base dollar (or” narrow money “or” high power money “) exists with one-to-an increase in public debt, collective debt of taxpayers. Thus, private banks use the basis to create more dollars hesitance (in the “extensive money”) that exists with a person — in a private debt.
“Going the other way, if people in the private sector pay off all their debts, and the federal government paid all its bonds, then the US dollar supply is almost killed.”
“This is the meaning in which our fiat-money, fractional-reserve system uses“ debt-based money. “Although market prices are flexible and may react to deflection better than most people realize, it is still true that our system is pointless.”
A UTA-GDP ratio above 100% means that the total government debt exceeds the country’s annual output. In this case, for every additional dollar borrowed by the government and invested in the economy, the resulting (multiplier effect) is less than one dollar – that is, the return to additional borrowed funds decreases.
To explain in the context of the law of reduction of return/utility, the marginal utility of each additional dollar spent on growth development is negative.
It also means that excessive debt no longer develops productive economic growth and can be really dangerous. Think of gorging your favorite ice cream without a break (like the governments borrowing the borrowed money for decades); Eventually, at some stage, you will throw. There we are in terms of financial finance and the ratios of the UT-GDP in the US and other advanced countries.
What’s next?
This includes GDP’s higher nominal growth through a structural level of inflation, which is what many countries have done, including the US and the UK, to relieve debt after World War II.
Moderate inflation is allowed to erase the true amount of the debt, thus reducing debt delivery and decreasing ratio, may revanize demand for properties such as gold and bitcoin.
Other steps may include appreciation for currencies and implementing capital controls and financial repression, all of which can work well for alternative investments, such as cryptocurrencies.
On a lightweight note, the reduction of fiscal spending – a initial strategy that Trump promotes – may be the only way to restore the economy.
Consider this medical similarity.
When your body is exposed to excess blood sugar over an extended period, cells tend to develop insulin resistance, leading to type 2 diabetes. Doctors often recommend fasting to help restore insulin sensitivity.
Similarly, preventing fiscal expenditure may be the only way to significantly lower the ratio of the GDP ratio below 100%, thus restoring the effectiveness of the fiat system-based fiat system to produce growth.
That said, what if the governments fail? The FIAT -based FIAT system can be truly then, intensifying the search for successors, with blockchain and crypto as potential options.
Let’s see how things will open.
