This is an opinion editorial by Robert Hall, a content creator and small business owner.
If you follow US politics, you understand that the country is on the brink of default with a whopping $31 trillion in debt.
At the heart of the issue is that there are Republicans in a corner, who control the House of Representatives with a slim 222 to 213 majority. In the other corner, the US Senate and the White House, under Joe Biden, are controlled by Democrats.
Both parties are at odds with each other’s preferences. Republicans want to cut spending to raise the debt limit for one year. Democrats want a “clean” debt ceiling bill passed with no strings attached. As you can see, the starting positions of the two parties are not close to each other. Finally, it has become a game of chicken based on who blinks first. Everyone is very tired.
Is this the way a government should be run? It is foolish for these leaders to risk not being reimbursed for the money that has already been spent. It’s like if you or I took 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 has long been able to run the debt because it has willing participants, such as pension funds, hedge funds, sovereign wealth funds and regular joes who lend them money by buying treasury bills because they believe that they will be paid. back with interest.
This has been happening for a long time, but now this arrangement is being questioned by their will, should they not continue in Congress now.
Are these politicians so detached from reality to think that, once the debt limit is exceeded and people stop paying what they owe, people will go right back to lending to them?
If they do, they will demand higher interest. The government can’t even afford the rates we have now! What happens if the cost of borrowing for the government goes to 10% or 15%? Nothing is funded; I have so much to tell you.
Check it out: The federal government is spending a record $475 billion in interest payments in fiscal year 2022. Interest costs grew 30% last year and are poised to jump another 35% this year, according to its own estimates by the Congressional Budget Office (CBO)!
The CBO estimates that the federal government will spend $640 billion in interest payments this year alone. Is this the debt spiral that James Lavish has been talking about lately? It sure looks like hell to me.
We are on a slow-motion collision course with the economic reality that you cannot print and borrow money without consequence. Inflation rears its ugly head, and then people realize that the money they are being paid has diminishing purchasing power. When people find out they’re losing money when they lend it to the federal government, it’s game over.
This debt ceiling debate will highlight the dysfunctionality of the federal government and its inability to keep its promises. This is what surprises me about politicians on both sides of the aisle.
Do they really want to show this level of incompetence to the world? Like watching your family fight in the front yard. It is embarrassing and can change the perception of your neighbors about your family.
A debt default would change the perception of the US from a reliable payer to a debt junkie unable to pay its debts.
How Good Is Default For Bitcoin?
The silver lining to this whole debt-ceiling disaster is that it will drop rocket fuel on 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 earmarked for treasures will flow into bitcoin.
New entrants to bitcoin will find this to be the safe haven asset they’ve been looking for all along. There is no corresponding risk, and the supply is inexhaustible.
During the last controversial debt ceiling debate, under the Obama administration, the price of bitcoin went from $13 and ended the year at $755. It also reached an all-time high of $1,163 that year. Just a coincidence? Perhaps, but it makes sense for people to protect their wealth in times of potential disaster such as a default.
So, I say to the politicians running the government now: Go ahead and keep playing these games. Default or no default because, in the end, it doesn’t matter; you are still a loser. You are leading the world to destruction, and Bitcoin will be relied upon to save humanity from itself. The debt-ceiling debacle only hastens the inevitable.
And to the Bitcoiners: Keep stacking them like your life depends on it, because one day they will.
This is a guest post by Robert Hall. The opinions expressed are their own and do not necessarily reflect those of BTC Inc or Bitcoin Magazine.