Congressional Budget Office (CBO) predicts This year the budget deficit in the United States will rise to $2 trillion. That’s $400 billion more than forecast in February and $300 billion more than the 2023 deficit.
This year the deficit will reach 7% of gross domestic product (GDP), higher than in some recessions. This is theoretically suitable for Bitcoin.
America’s government deficit is exploding
What is strange about this story for researchers is that there is no depression or other suffering. In such cases, it is more “normal” for the government to spend relatively more.
Right now the economy is strong on paper and the labor market is very tight. Assuming that situation changes, it could lead to an even more aggressive spending pattern.
Many people are worried at the moment that the current debt situation is already getting out of hand.
America’s dangerous financial trend is evident in the above image. According to the CPO, spending will reach 25% of GDP in the long term in the coming years, while income will remain at 17.5%.
Why is this good for Bitcoin?
In theory, this is good for the price of Bitcoin, because the US has only one realistic way to solve these problems: printing money.
For this one has to take more loans and also has to pay interest on that loan. This could eventually create a vicious debt circle, a negative spiral, in which America’s debts are increasing faster and faster.
And then of course the question: Who else is interested in buying America’s debt?
No one can come up with a clear and convincing answer to this question. That’s the major weakness in the US dollar right now (long-term), which should benefit Bitcoin and other assets with natural scarcity.
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