U.S. National Debt Not Good for Our Kids and Grandkids (Powell); Would Bitcoin Be?
In what should be a wake-up call to the powers-that-be, Federal Reserve Chair Powell warns of unsustainable US national debt.
Speaking during testimony before the Congress’ Joint Economic Committee on Nov. 13, Powell talked of the growing US debt pile. Warning that the growth in debt was outstripping that of growth in GDP, Powell said the issue must be addressed at some point in time. Should we prepare for imploding fiat money by investing in bitcoin?
US debt, fiat money, and bitcoin
In the long run, it was impossible to sustain this trend, Powell said.
As this is being written, the US national debt is $23,042,497,209,576, and the debt per citizen is $69,807.
The trend of the US Federal Debt to GDP Ratio is as follows:
1960 – 52.21%
1980 – 34.70%
2000 – 55.62%
Now – 106.69%
Fiat money and bitcoin: Should we be alarmed about the debt?
No (because): Powell said it was possible to fix the situation by getting GDP to grow faster than debt.
Yes: Powell said it was not the Fed’s job to fix the situation. “How to fix that — it’s easy to say that — how do you do that and when do you do that is an issue that is up to you and not to us.”
No: Powell said reversing a situation like the current one usually takes very long.
Yes: Powell said, “I would be remiss in not pointing out that the consequences of not addressing it are just that… our kids and grandkids will be spending their tax dollars servicing debt rather than on the things they really need.”
Ironically, as national debt increases, so do interest payments. Growing interest payments means there is less leftover for development projects. That will slow down growth.
Growing national debt and deficit also affect the value of the national currency and, therefore inflation. Higher inflation results in erosion of the purchasing power of the currency.
Clearly, fiat currencies are risky for the common man.
Rise of bitcoin as fiats decline
Because the maximum supply of bitcoin is restricted, its supply cannot be manipulated like fiat currencies.
Its valuation in terms of fiat currencies will continue to rise as the latter decline.
Like gold, bitcoin may, therefore, be used as a hedge against the depreciation in fiats.
[Related Story: Bitcoin Beat Tech Stocks This Year; Yes You Heard That Right ]
Latest Alternative Investment News
deVere Group released a report last week that found that the use of fintech apps in Europe grew by 72% in just a week. The Swiss-based consulting firm said large…
Volatility has shaken the markets. The Dow had its worst quarter in history. The U.S. economy could see GDP fall by 30% this quarter. And four portfolio managers at Citadel…
Silver Lake Partners is going big with its latest fund. The technology-focused private equity fund wants to raise a new fund worth $16 billion. Raising funds as market prices have…
The coronavirus pandemic throws up ESG in a new light. Far from spelling doom for ESG investing, the pandemic may have given it fresh, positive potential. An article by Marlene…