So You Racked Up $31.4 Trillion in Debt...now What?
Article source, here.
TL;DR
The US government, much like the Lannister family, is widely known to always pay its debts. But right now, the US has debts coming due that it can't afford to pay off.
One solution? Take out more debt, to pay the past debt. (The same way your chaotic best friend keeps taking out new credit cards to pay off their old ones).
To bring in the cash needed to service this new debt, the government would most likely issue new bonds.
These bonds will likely absorb money that might have previously been put into cryptocurrencies, like Bitcoin.
But hey, a dip in crypto prices to ensure continued faith in the US financial system? We'll take that trade.
Full Story
Ok, so you might be hearing a bunch of chatter about the US debt ceiling, the potential issuance of Government Bonds and its effect on crypto.
Here's what it all means in plain language:
The US government, much like the Lannister family, is widely known to always pay its debts.
But right now, the US has debts coming due that it can't afford to pay off.
If it were to default, it could have massive implications - because up until now, the US has always been seen as the global financial super power.
(Defaulting on debts = a loss of faith in the US financial system).
One solution? Take out more debt, to pay the past debt.
(The same way your chaotic best friend keeps taking out new credit cards to pay off their old ones).
The one thing standing in the way of this approach is the debt ceiling.
Just like the rest of us, the US has a limit of how much its allowed to borrow. The only difference is, the US government controls its own borrowing limit.
Meaning, if the US wants more money, it can just raise its limit (which is currently sitting at - wait for it - $31.4 Trillion. With a T.)
Here's how this move could impact the crypto market:
To bring in the cash needed to service this new debt, the government would most likely issue new bonds.
Bonds are kind of like government I-Owe-You's, you buy a bond → the gov. gets the cash, and pays you interest over time.
Investors like government bonds because they're seen as super safe bets.
You put your money in, you earn interest, and get your initial investment back at the end of it all.
Bada-bing-bada-boom.
The worry for the crypto market is that these bonds will be too tantalizing for the broader market, and some of the money that might have been put into cryptocurrencies, like Bitcoin, will instead go to bonds.
But hey, a dip in crypto prices to ensure continued faith in the US financial system?
We'll take that trade.