- Musk warns U.S. debt could lead to economic collapse.
- Bitcoin is seen as a potential reserve currency solution.
- Spending bill criticized for adding $3T to debt.
The U.S. national debt, which currently stands at $36.9 trillion, has alarmed Elon Musk. He expresses grave concern about the potential economic ramifications of unchecked expenditure. Musk’s worries echo his recent X posts calling for the country to tackle the fiscal deficit. Coinbase CEO Brian Armstrong posted about the role Bitcoin could play in stabilizing the economy, and he flagged it. Rapidly growing U.S. debt threatens financial stability and is prompting discussion for alternative reserve currencies.
The vocal stance of Musk comes in the middle of a debate over a massive spending bill. But he denounced the legislation as a “disgusting abomination” that drives excessive government spending. The bill, which stalled in the Senate after passing the House, could pile an additional $3 trillion on the debt over the coming decade, says the Committee for a Responsible Federal Budget. Musk warns of long-term economic damage if we don’t practice fiscal restraint.
Bitcoin as a Reserve Currency Solution
Bitcoin is a potential reserve currency to fight the debt crisis, and Musk has signaled support. In response to Armstrong’s warning that Bitcoin would replace the US dollar in the current deficit situation, he posted on X. The inclusion of a USA flag emoji in Musk’s Bitcoin support shows that he is confident in Bitcoin’s ability to protect the economy from fiscal mismanagement. That’s in line with increasing sentiment among crypto cheerleaders who view digital assets as an inflation hedge.
Awareness of a Bitcoin reserve was triggered by Senator Cynthia Lummis proposing the BITCOIN Act. The legislation, which follows an executive order by President Donald Trump in March, aims to codify a strategic Bitcoin reserve. Keeping Bitcoin for 20 years, claims Lummis, could cover the whole national debt. Skepticism, however, remains in place, with crypto influencer Wendy O going on to assert that the inherent instability of Bitcoin precludes its use as a medium of exchange. Stablecoins, she suggests, may be a more practical alternative.
This shift towards Bitcoin from Musk is consistent with his other critique of government spending. While he was leading the Department of Government Efficiency (DOGE), when he tried to cut $2 trillion from the federal budget, he came up with only $175 billion in savings. He left the Trump administration in May with frustration at bureaucratic resistance. However, Musk persists in calling for fiscal reform, and he is using X to escalate the debate.
Recent posts on X clearly show that public interest in Bitcoin’s role has surged. Musk’s reaction to Armstrong’s post was interpreted by one user as a strong endorsement of the possibility of Bitcoin replacing fiat currency. One other post mentioned the $36.9 trillion debt and warned of fading confidence in the dollar that could speed up a movement to cryptocurrencies. And these feelings highlight the need to deal with the debt crisis and examine what other financial systems may exist.
