Financier Chamath Palihapitiya Issues Grave Warning on U.S. Debt Catastrophe, Ponders Possible Credit Rating Downgrade, Risks of Treasury Selling, and Other Consequences
Unfiltered Finance Insights
LET'S TALK MONEY, BABY!
Catchier headline: Billionaire Billionaires Warn America About Catastrophic Finances
Chamath Palihapitiya, a savvy venture capitalist, and Elon Musk, the CEO of Tesla and SpaceX, have both issued alarming warnings about the consequences of a bill recently passed by Congress. The bill, known as The One, Big, Beautiful Bill, aims to supercharge America's growth by making the 2017 Trump tax cuts everlasting, among other pro-growth policies. However, these billionaires warn that it will end up causing long-term harm to America's balance sheet.
Palihapitiya recently spilled the tea on the crypto-focused All-In Podcast, where he lamented that the last-minute bill lacks meaningful reform and does little to curb the country's uncontrolled debt spiral. According to him, the bill took a turn for the worse and veered away from austerity towards "debt-financed industrial policy."
The billionaire’s not-so-subtle warning is this: the ballooning national debt will lead to skyrocketing interest rates, with the 10-year Treasury yield soaring to 5% by year's end and the 30-year yield bursting through the 6.25% barrier, possibly even hitting 6.5%. That, he says, would put the U.S. economy in a World of Hurt™.
So, what happens when interest rates spiral like that? Well, Americans will feel the pinch as they're forced to de-lever (aka sell their assets) to reduce their debt. They'll ditch U.S. debt in favor of gold, Bitcoin, or other safe havens. Credit rating agencies will downgrade the U.S., driving fear even further. Intelligent folks (like Elon Musk) will publicly share their concerns, causing investors to jump ship en masse. That, dear readers, is how I see it.
Musk recently chimed in on the situation, stating that accelerated GDP growth is an absolute must if the U.S. wants to escape the ever-expanding government debt problem. He believes that Dogecoin could help delay this grim fate, but ultimately predicts that profligate government spending will sink the U.S. without substantial improvements in productivity.
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- The recent passing of The One, Big, Beautiful Bill by Congress, although aiming to boost America's growth, has been criticized by billionaires like Chamath Palihapitiya and Elon Musk for lacking meaningful reform and exacerbating the country's uncontrolled debt spiral.
- In an alarming warning, Palihapitiya predicts that the ballooning national debt, if left unchecked, could lead to skyrocketing interest rates, with the 10-year Treasury yield soaring to 5% by year's end and the 30-year yield potentially reaching 6.5%.
- As interest rates increase, Americans may be forced to sell their assets to reduce their debt, which could lead to a shift from traditional investments like government debt to safe havens such as gold, Bitcoin, or other cryptocurrencies.
- The crypto space is buzzing with news, including the launch of the Blockchain Builders Fund for Web 3.0 startups, the successful fund closing by No Limit Holdings for digital assets, and the announcement of the Bet20 Premium Casino Platform with licensed games. These developments in the blockchain and cryptocurrency arena are shaping the future of personal-finance, policy-and-legislation, and general-news.
