This is an opinion editorial by Robert Hall, content creator and small business owner.
If you follow American politics, you understand that the country is is about to default on its massive $31 trillion debt.
In essence the issue is that there The Republicans are in one corner and control the House of Representatives with 222 to 213 a slim majority. In the other corner, a file appears U.S. congress And the White House, led by Joe Biden, is controlled by Democrats.
Both parties are completely opposed to what the other wants. Republicans want Significantly reduce spending In order to raise the debt limit for a year. Democrats want A “clean” debt ceiling bill passed without strings attached. As you can see, the starting positions of both parties are not close to each other. In the end, this turned into a game of chicken based on who blinks first. It’s all very tiring.
Is this how government should be run? It is absolutely insane that these leaders would risk defaulting on money that has already been spent. It’s like if you or I whipped out a credit card, went crazy buying all kinds of things, and didn’t make the monthly payment at the end of the month.
The government was able to build up debt for so long because it had willing participants, such as pension funds, hedge funds, sovereign wealth funds and regulars who lent them money by buying treasury bills because they thought it would be paid. Return with interest.
This has been the case for a long time, but now that arrangement is being called into question because of their will, they just won’t do it in Congress right now.
Seriously broke
Are these politicians so detached from reality that they think that once they breach the debt limit and stop paying what is owed to them, people will go straight back to lending them money?
If they do, they will demand higher interest rates. The government can’t even afford our prices now! What happens if the government’s cost of borrowing rises to 10% or 15%? nothing is funded; I can tell you that much.
Take a look at this: The federal government spent a record $475 billion on interest payments in fiscal 2022. Interest costs grew 30% last year and are expected to jump another 35% this year, according to estimates from the Congressional Budget Office (CBO)!
The Central Bank of Oman believes that the federal government will spend $640 billion on interest payments this year alone. Is this the Debt Spiral by James Lavish been talked about recently? It sure looks like hell to me.
We’re on a slow-moving collision course with the economic reality that you can’t print and borrow money without consequences. Inflation rears its ugly head first, and then people realize that the money they are being paid has reduced their purchasing power. Once people know they are losing money when they loan it to the federal government, the game is over.
This debate over the debt ceiling will highlight the dysfunctional federal government and its inability to deliver on its promises. That’s what surprises me about politicians on both sides of the aisle.
Do they really want to show this level of incompetence to the world? It’s like watching your family fight in the front yard. It’s very embarrassing and will change your neighbors’ view of your family.
A debt default will change the perception of the United States from a reliable payer to a debt addict unable to pay its debts.
How is default good for bitcoin?
The silver lining to this total debt ceiling debacle is that it will throw rocket fuel at the price of bitcoin. As people see that their money is no longer “safe” with the federal government, they will look for an alternative to US Treasuries. Undoubtedly, some of the dollars that would have been earmarked for Treasuries will flow into Bitcoin.
Newcomers to bitcoin will see it as the safe haven asset they have been looking for all along. There is no counterparty risk, and the offer cannot be diluted.
during the Another controversial debate is about the debt ceilingUnder the Obama administration, the bitcoin price rose from $13 and ended the year at $755. It also reached an all-time high of $1,163 that year. coincidence? Perhaps, but it makes more sense for people to protect their wealth in times of potential disasters such as default.
So I say to the politicians who are running the government now: go ahead and keep playing these games. default or not default because, in the end, it doesn’t matter; You still lose. It has brought the world to ruin, and it will be up to Bitcoin to save humanity from itself. The debt-ceiling debacle only accelerates the inevitable.
And to bitcoiners: keep piling on them as if your lives depended on them, because someday they just might.
This is a guest post by Robert Hall. The opinions expressed are entirely their own and do not necessarily reflect the opinions of BTC Inc or Bitcoin Magazine.