In recent days, there has been talk about the possibility that the US will default on their loans, as the debt hits their debt limit ceiling of 31.4 trillion, which was already raised back in 2021, so they could print more money from the future to cover what they had already printed in the failure to economically deal with the Covid pandemic, and extract a bit more from the population.
For a little bit of perspective on just how much money 30 trillion looks like, this is a good visualization and it is also interesting to note how fast it has reached that point.
For example in billions:
2007 - $9,008 - Bank crisis
2008 - $10,025 - Bank bailout and QE
2009 - $11,910 - Bailout cost $250B ARRA added $242B
2010 - $13,562 - ARRA added $400B, Obama Tax cuts
2011 - $14,790 - Debt crisis, recession and tax cuts reduced revenue
2012 - $16,066 - Fiscal cliff
2013 - $16,738 - Sequester, government shutdown
2014 - $17,824 - QE ended, debt ceiling crisis
2015 - $18,151 - Oil prices fell
2016 - $19,573 - Brexit
2017 - $20,245 - Congress raised the debt ceiling
2018 - $21,516 - Trump tax cuts
2019 - $22,719 - Trade wars
2020 - $27,748 - COVID-19 and 2020 recession
2021 - $29,617 - COVID-19 and American Rescue Plan Act
2022 - $30,824 - Inflation Reduction Act and student loan forgiveness
And currently:
That is a full 350% increase in national debt in the US between 2007 and today, with around 30% of that being added in 2020/21 alone. But you know, since it is "old economic theory" to suggest that printing copious mounts of money causes inflation, we now know better that it is Putin causing it all.
The debt ceiling is a legislative ceiling on how much debt the US government can hold, which is meant to limit and control their spending. However, when it is possible to just keep increasing it, what is the point? Still, if it isn't increased, it is likely that the US Treasury will be unable to cover its debt obligations and default on their loans, which will likely trigger an economic collapse.
While I am no expert on macro economic policy, if history repeats, the US has never defaulted on its debt. So I presume the assumption is that the debt ceiling will again be raised and since the last raise was 2.5 trillion in December 2021, it will likely increase by more than that, as that has been burned through in just over a year. This buys some time and since the government isn't actually trying to rein in debt, it is likely that it will expand even further, meaning trillions more pumped into the economy in the coming year or two, which is going to impact on the economy, inflating prices further.
As it is very unlikely that the Us government would allow a default due to the impact it would have on the confidence of investors into the US, it might allow it to cut things close, as that alone will throw turmoil into the markets, likely dropping values down significantly.
Buy the dip.
All this talk might also be the reason for the rally on BTC, because if there is a large dip coming, people are going to want to make sure they have their positions covered, even if it means paying a premium now. And, buying BTC might also be seen as somewhat of a hedge of increased government spending too, at least in the long term view of things.
One thing is certain in all of this in my opinion, and that is, the economy is screwed. All of these unnecessary complexities create various kinds of loopholes that can be taken advantage of by those who have the power and means. The majority of us however, are just paying passengers on the rollercoaster, having made no decision to get on, no control over where it leads and no possibility to get off. Of course, there are increasing options coming that are just in their infancy that can help us start to take back control of our economic lives, but until enough are willing to drop the traditional economy and support a decentralized shadow economy, we are captives.
While it used to be tax, these days debt makes the world go round, and while we have little control over the national debt, we can influence our personal debt. It isn't an easy process under the current conditions, but maybe paying attention and learning the behaviors to get out of debt and build wealth now, will have payoffs down the road, when the entire global economy collapses.
We are living in strange times along so many lines now, that at least for me, it is hard to really get a handle on all the things that I feel I should in order to manage my life well. But, waiting around for the government (or anyone else) to save me is probably not going to get better results than taking responsibility in my own hands and trying to improve conditions myself. And, even if I fail, which is likely, at least it is my active failure, rather than my passive failure of doing nothing.
Come on crypto.
Taraz
[ Gen1: Hive ]