A renown Cryptocurrency enthusiast and internet trader, Kim Dotcom believes that the US Debt would crash the US economy and this could devastate the global economy. He then advises people to invest in Cryptocurrencies to cushion themselves from the looming devastation. Digital Assets will be the preferred unit of value that binds retailers, wholesalers, service providers and consumers in the future given the circumstances in the absence of a robust economy.
Investor: US Debt Is A Death Spiral That Cannot be Undone
A German-Finnish Internet entrepreneur as well as a famous investor in Crypto, Kim Dotcom, said that the US economy will certainly collapse in the years to come, probably by 2020. The German-Finnish expert’s sentiment is being echoed by leading economists such as Nouriel Roubini and Peter Schiff who also believe that there is a high possibility of a collapse in US markets given the spiraling public debt that is growing exponentially.
About The US Debt
As of July 2018, World Bank data reveals that the US debt is $21.4 trillion. This is 108% of its economy that points to unhealthy fiscal practices on the part of the US Treasury. In 2007, 2010, and 2011, the debt grew from 62%, 92%, and 102% respectively in years. However, the growth appears to have slowed down between 2011 and 2018 where it grew by only 6 points relative to the GDP.
However, the fact that the debt level is too high means that is an economic hazard, although debt is not necessarily counterproductive. However, the debt interest is projected to grow from 2017 figure of $458 billion to $799 billion in 2025 if the current trend continues. This has the effect of increasing the probability of the US Treasury to default on payment. Additionally, debt repayment siphons developmental funds from growth-inducing projects that any economy needs to grow.
On a political aspect, the US-China trade war could make China sell its US Treasury bonds that are over $1 Trillion in value, a factor that may influence a cash crunch scenario in the US.
Cryptocurrencies Can Cushion People From The Effects Of The Crash
At about $20 trillion, the US is the largest nominal economy that accounts for about 20% of the world share of wealth. A shock from the US markets could trigger a severe global economic downturn since the US has strong ties in the global economy.
Meanwhile, Cryptocurrencies are decentralized from the mainstream economic activities. They operate in a separate ecosystem where mining and transactions cannot be affected by the economic effect in case of a crash. Hence, Dotcom is advising people to invest in Cryptocurrencies to cushion their financial standings.
Additionally, JP Morgan, the IMF, Department of Capital Markets and Emerging Markets Policy in the Institute of International Finance, and other financial and economic experts believe that the 2020 crash projection is inevitable if the US Government continues to ignore the implications that debt could have in the future.
Cryptocurrencies and Blockchain networks could be the best alternative since they will act as a virtual economy where goods and services are transacted freely and independently by two economic peers. Additionally, Digital Assets are projected to gain in the coming years as the projections of bull runs are becoming more eminent with the tremendous steps being taken to grow Cryptocurrencies such as Blockchain-friendly regulation.