U.S. Debt Surpasses $39.7 Trillion, Sending Investors to Bitcoin and Gold
The U.S. government's debt has surpassed $39.7 trillion, reaching an all-time high according to the Treasury's Debt to the Penny dataset. The federal debt is growing by approximately $7 billion each day, which would rank as the 16th-largest cryptocurrency if it were market capitalization.
This rapid growth in debt supports the 'debasement' trade, a bet that fiat currency will fall in value. Investors are turning to limited-supply assets like gold and Bitcoin to shelter from dollar devaluation.
Apollo chief economist Torsten Slok warned that the U.S. debt-to-GDP ratio of over 120% leaves little room for additional spending should a recession occur. The Fed can't cut interest rates aggressively without adding to inflation, reducing bond yields, and necessitating more government borrowing.
As a result, if a recession happens, it could be longer-lasting and may trigger demand for assets outside the financial system, such as Bitcoin and cryptocurrencies.