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 ]
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Honestly, being in Finland I think you might be in a better position than literally everyone else I know.
It is possible. In general, things are "okay" here in comparison, with one of the reasons a relatively stable government that hos some checks and balances on it.
Totally... and okay is okay... but I see US going down a road of total instability in the next few years, with the UK not too far behind... and Australia is going to have a lot of extreme weather to deal with too. Okay might turn into great comparatively in the next 5-10 years.
Fortunately I don't have much debts, just my credit cards. Sure, we don't have control over national debt, but it has control over our life. The more it increases the more they make us tighten our belt.
Just imagine if say, the spending on anything that was non-essential (including military) had to go through thew people and had to be funded directly out of pockets.
Nationalist acts are in trend nowadays to stay in power.
Such debts make us see why the cryptocurrency is a better and even borderless option than FIAT. Decentralization fights against corruption, so until we have a financial system mimicking what crypto has achieved, the value and trust will keep going away out of the window. And who knows, a bigger crisis might be on the horizon.
Posted Using LeoFinance Beta
I agree. For it to be adopted however, we have to demand it from the governments. None will agree of course.
I think Democrats made a huge blunder by not raising the ceiling or simply getting rid of it during the lame duck session. The nutjob wing of House Republicans will certainly try blackmail. The crazy thing is that the ceiling is for spending that has already been approved. They could have simply not approved the spending at an earlier stage. But that would have meant hard decisions; so much easier to kick the can down the road.
I can’t believe that TPTB will let the U.S. default. The nutjobs will lose, or the Treasury will issue several trillion dollar coins. I’d be surprised if there aren’t already designs, or maybe even dies.
This is the economy as a whole these days and while bad for us, it is great for the 0.1%, as it means they have endless supplies of money coming in that they convert to real value assets.
It won't default, but I am really thinking they will make it look close and buy the dip.
Lol 31 trillion, imagine that.. Laughs I suppose my country is also deeply in debt.
As for thee dip, hive is still pretty low compared to where it was I think we've still got a few good buying opportunities ahead
I don't know if you looked at the visualization of just what a trillion looks like, but it is insane :)
Plenty of opportunities ahead. I am also hoping that when it does spike again, it moves past where it was and sets a much higher base price than where we are now. A dollar sounds good for a base.
I know it's srs bsns and all but watching that visualisation escalating amused me greatly. I showed 18yo and he wanted to know who the US is in debt to.
I don't actually know either x_x
I think this covers it :)
https://www.thebalancemoney.com/who-owns-the-u-s-national-debt-3306124#:~:text=2-,Public%20Debt,and%20holders%20of%20savings%20bonds.
Thanks, I'll pass that on to him XD
Meanwhile it was a bit much for my meagre brain, think I'm going to need to read it a few million more times before I start getting into the same universe to be able to understand it x_x
Crazy to see the 31 trillion number. What would be the ultimate amount that collapses everything? 35? 40? Are we close to it yet?
I don't think it is the number that collapses it, but the social pushback.
In UK the things are getting serious, with so many strikes and people asking for a decent wage, but no money to pay the increases. The pensions are not looking great if you project the results for another 3 decades. It is a mess, and they do not know how to solve it. Interesting times.
All the highly paid economists, yet no one seems to have much of a clue.
What worries me is that nobody seems to have a clue with what's happening right now. We are in uncharted territories.
Crypto is one true savior. The last hope of humanity.
It really could be the last hope for our financial wellbeing at the very least.
I don't really think the US will default on their loans as long as it's the reserve currency. Then again, anything can happen depending on how bad the government messes up.
Posted Using LeoFinance Beta
I suspect it will "cut it close" but not default - just to increase fear and control.
Wow I didn't realise how much it has increased over the past couple of years. Had the impression that it was in the low 20s. Guess the cost of COVID was quite substantial. Thanks for sharing!
Pretty incredibly hey? I remember writing a few years ago when it was at 21T. :D
I do believe that the current structure of things is not sustainable. Perhaps if we did defaults on the loans and our credit rating was downgraded through the IMF potentially this would have an effect to speed up the change in what money and finance and value means.
Perhaps it would instigate change, but who wants to go through the pain of disruption willingly?
It's like getting your septum pierced. Incredibly painful lots of blood but afterwards you look super cool with the bull ring. Perhaps that's the same analogy for what's going on with our economy.??? Lolz
Maybe that’s why cryptos are pumping now. A reminder how the debt will keeps on going up until the reset.
That’s the reason for Bitcoin to exist.
At least, that is one of the stories I have in my head for the pump.
inflation will eat our fiat in few years anyway, so its time at least to make some investments, but if dollar will collapse all world economy will collapse too and all investments anyway:)
Perhaps it depends what is invested into. Inflation will make Bitcoin more valuable for example, but there is still only so many bitcoin out there :)
I would have thought that Trumps administration reduced the US dept with the way his followers brag about him. I see hard times everywhere and I am just trying to be optimistic while being ready for the worst. I really hope these times treat the cryptomarket well. I guess we will just have to see how it goes.
He gave himself some tax cuts perhaps ;)
😅😅😅😅
It fascinates me to see that there are talents like you who can make such a complete and instructive article.
I personally did not know the debt ceiling vs. the United States and some other details that you have captured in your writing, keep it up, those of us who value real and original good writing appreciate your work very much, regards 🥰🤗
I am guessing you are new into Hive? Welcome :)
If I'm new, I'm faced with writing articles too but I don't have the money to do it for Hive😒, and I don't know anyone who can help me
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Making my big bet on crypto also. Still hold some OG dividend stocks, but even companies can't be trusted these days. Give me the 24/7 crypto markets please.