United States Congressional Budget Office (CBO). say The country’s budget deficit is expected to be 13 percent higher than expected this year and $1.7 trillion in 2023, according to a new report. “Based on July’s deficit and preliminary estimates from August and September, CBO now expects the total deficit for 2023 to be $1.7 trillion, about $200 billion higher than the previous May estimate.”
What do these types of developments mean for Bitcoin?
Trillions of dollars per year
CBO estimates that after 2023, the U.S. deficit will increase from $1.6 to $1.8 trillion per year; and then reach $2.9 trillion by 2033. So deficits will continue to grow.
In a new interview with CNBC, CBO Director Philip Swagel said the U.S. government faces a challenging and unusual situation.
“The economy is recovering. We are beyond Covid-19. “The labor market is starting to look normal again, but despite this, the deficit is huge,” says Swagel.
Although economic growth will improve the country’s financial situation, it will not be enough to close the gap, says Swagel. “Even the most optimistic scenario is not enough to make us healthy,” he continues.
What does this mean for Bitcoin?
This is a big problem for the US, but it looks like good news for the price of Bitcoin. This means that the US has to take on more debt to cover existing gaps, thus keeping more money in circulation.
America simply cannot afford high interest rates, so interest rates must be lowered. If interest rates remain at this level, interest costs on the debt America already holds (more than $33 trillion) will rise.
In that sense, we are in a good position with Bitcoin, where it seems only a matter of time before interest rates are cut, otherwise America will have even bigger problems.
The longer the current high interest rates persist, the bigger the problem will be for the US. It has an absolute shortage of 21 million units, leaving people looking for an alternative to the US dollar and Bitcoin.
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