U.S. Government Debt Grows by $275 Billion in One Day

By Decrypt October 05, 2023 In Bitcoin
The National Debt Clock in Times Square in New York. Image: rblfmr / Shutterstock.com

America is beyond broke.

News broke today that the United States government added a precipitous $275 billion worth of debt in the past twenty-four hours–a number that surpasses half of Bitcoin’s entire market capitalization, which currently sits at $535 billion according to Coingecko.

It also translates into $1,300 per American per day.

The whopping quarter of a trillion dollars is added onto the seemingly insurmountable $33 trillion worth of national debt that the U.S. carries as of this writing.

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According to Jeff Booth, the author of The Price of Tomorrow, none of this is surprising–adding that the global financial system is already insolvent. “We are witnessing the inevitable rise in exponential debt,” he told Decrypt.

Booth added that “thanks to the exponential increase in productivity due to AI and other technologies, we should all be richer and working less.” The inverse is happening, however, due to a debt-riddled system that allows for this type of manipulation.

For macro analyst Lyn Alden, the aforementioned numbers haven’t been seen in nearly 80 years. “Most developed countries including the United States face public debt levels relative to GDP that haven’t been seen since the 1940s,” she told Decrypt, explaining the link between these levels and interest rates.

“For the past few decades, structurally rising debt levels were offset by structurally falling interest rates, which kept public interest expense in check,” she said–hinting at the possibility of a late-stage debt bubble.

Over recent years, U.S. debt has been at the forefront of tense congressional battles. In late May, concerns over a first-ever debt default loomed near, with lawmakers finally striking a deal, raising the country’s funding limits. Just last week, a potential shutdown also reared its ugly head, although once again, policymakers managed to find common ground.

However, today’s impressive debt addition only fuels concerns about the U.S.’ ability to pay essential services and its outstanding bills with foreign entities.

That said, this all plays in Bitcoin’s favor–although investors should look further into the future for it to play out. Alden explained to Decrypt what she meant when she posted on Twitter that she “likes the orange coin for the next few years at current price levels,” but holds “no firm opinion” on the next few months.

Bitcoin’s price tag is highly correlated with global liquidity, she said, “at least within the second half of its lifetime when it started to become meaningfully large and a true macro asset.”

The macro analyst explained that when broad money supply denominated in dollars rises, Bitcoin “tends to do very well.” Although she thinks global liquidity has a “very unclear direction” over the next few months, Alden drilled down the point she put forward on Twitter.

“In 2024 or 2025 when the Fed is no longer able to continue reducing its balance sheet, I expect another upleg in global liquidity,” she said, predicting an increase in the Bitcoin price.

Booth agrees but adds a more pressing fact: “If we don’t add global liquidity, everything could collapse.” He calls Bitcoin a “bridge to the other side,” explaining that in BTC terms, “prices fall forever.”

He is reticent to using the U.S. dollar as a pricing instrument against Bitcoin because that means “pricing everything through manipulation.”

That said, Alden sprinkled in two other ingredients that might fuel the rise in Bitcoin price: the bear market and the upcoming Bitcoin halving. The latter keeps the supply side of Bitcoin “very tight,” whereas the former has pushed coins out of fast-money liquid hands into illiquid hodlers.

These factors lead her to conclude: “I view the current time as a good period for accumulation and patience.”

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