“US National Debt and Government Near Bankruptcy: Implications for Bitcoin and Cryptocurrency”

The United States is one of the hottest topics of conversation right now. It doesn’t happen that often, but governments can also go bankrupt. The US national debt is huge, but at the same time interest rates are also very high. The US budget office believes that the US will be unable to pay its debts in the first two weeks of June.

US government near bankruptcy

In a rapport writes the Congressional Budget Office (CBO) that it will be about $ 1.5 trillion ($ 1,500 billion) short for 2023. That is 0.1 trillion more than it expected at the beginning of this year. Unfortunately, it is not only short of money, it is also close to the debt ceiling. This is a limit set by the US Parliament on how much debt the federal government can take on. It is controversial to raise this level because the debt is part of the public sector.

The government agency thinks that if the debt ceiling is not raised, there is a good chance that it will no longer be able to pay its own national debt by June. This would mean that the Ministry of Finance would no longer be able to refinance the debt.

That refinancing now has to be done at a very high interest rate because the Federal Reserve has allowed interest rates to rise so fast. So the debt has become a lot more expensive. The CBO hopes for a little breathing space for 2024. Revenue growth is expected for next year.

National Debt Continues to Grow: Good for Bitcoin?

Unfortunately, it thinks that the share of debt held by the US government itself will not decrease in the coming years. This portion would be 98% of US Gross Domestic Product (GDP) by the end of 2023, but by 2033 it would already be 119%. That would be the highest level of US national debt ever. Still, relatively speaking, it’s not too bad. For example, in Italy this ratio is 135.5%, and in Japan it is even 237.1%.

The hope is that this will be positive for bitcoin (BTC) and other cryptocurrencies, because in theory this could cause high inflation. After all, Bitcoin was created after the credit crisis of 2008, in which there was a fear that the US government would cause a lot of inflation by printing.