Elon Musk recently warned of a looming “financial emergency” for the United States. Notably, Musk’s fears about the growing $35 trillion U.S. debt came as the price of bitcoin skyrocketed, hitting a historic high of $80,000. In addition to bitcoin, the price of dogecoin (Doge) has also exploded thanks to Musk’s support for the idea of building a Ministry of Government Efficiency.
Musk has called the rise in US debt “unsustainable.” “Government overspending is bankrupting the United States,” Musk posted on X, the social media platform he acquired two years ago.
Sharing Musk's view, Kentucky Senator Rand Paul also called "the US's $2 trillion annual deficit unsustainable."
Paul made headlines in 2015 when he began accepting campaign donations in bitcoin to support his Republican bid for the White House, and was followed by Donald Trump and many other 2024 candidates.
In 2021, Mr. Paul said in an interview that he believes cryptocurrencies could replace the US dollar due to lack of trust in the dollar and increased government oversight.
The US national debt has skyrocketed in recent years, topping $34 trillion by early 2024, largely due to Covid and lockdown stimulus measures that have sent inflation spiraling out of control and forced the Federal Reserve to raise interest rates at record levels.
Earlier this year, Mr. Trump floated the idea that he could use bitcoin to “pay off the $35 trillion in U.S. national debt.” The idea was to hand creditors a small digital check: “We’ll give them a little bitcoin and wipe out our $35 trillion,” he said.
According to some cryptocurrency experts, Mr. Trump's statement is an affirmation of the power of limited-supply assets in absorbing and transforming US dollar inflation into a new system based on sound monetary technology and blockchain.
As the US government continues to devalue the USD by printing more money to pay off previously outstanding debts, the price of Bitcoin continues to rise against the USD.
If the US economy previously took 200 years to record the first time its public debt reached 1,000 billion USD, then after the Covid-19 pandemic broke out, every 100 days, the US public debt increased by nearly 1,000 billion USD.
In June, about 76% of total income tax revenue went to paying interest on the massive public debt, making interest payments one of the highest expenditures in the US fiscal budget.
Many experts believe that bitcoin could solve this problem by slowly drawing value from the current US dollar system into a digital asset with a limited supply, preventing a total currency collapse.
In July, during an appearance at the Bitcoin 2024 conference, Trump promised to create a “strategic national bitcoin reserve” and predicted bitcoin could surpass gold’s $16 trillion market capitalization.
Musk's campaign against excessive US spending has led to calls for the creation of a Doge's Department of Government Efficiency, which Musk has said he believes would cut US spending by $2 trillion.
The Doge set is a nod to the shiba inu doge meme which also involves the cryptocurrency dogecoin, which Elon Musk has called his "favorite" cryptocurrency and is accepted as a payment method by his car company Tesla.
Doge's association with rival bitcoin has caused the price of dogecoin to double over the past month, with billionaire Mark Cuban even joking that Musk might put dogecoin in the US Treasury.
