Tesla billionaire Elon Musk, who surprised traders with a shock bitcoin endorsement this week, has repeatedly warned in recent weeks that the U.S. is teetering on the brink of "bankruptcy."
The bitcoin price has surged this year as fears over the spiraling $35.7 trillion debt pile pushes the price of gold to an all-time high—with the Federal Reserve caught in a "nightmare" scenario.Now, Musk, who is working overtime to get "crypto president" Donald Trump back into the White House, has called the U.S. government's $1 trillion per year interest payments a "financial emergency," as inflation fears push another legendary investor to buy bitcoin and gold.
"Just the interest payments on the debt are 23% of all federal tax revenue," Musk said during a Trump campaign rally, later calling the situation a "financial emergency" on X. "The interest payments now exceed the Defense Department budget, which is $1 trillion a year. That's a lot of money."
The bitcoin price has returned to just below its all-time high of $70,000 per bitcoin this year, rocketing higher along with the gold price, as investors bet higher interest rates combined with a huge increase in deficits will create a feedback loop, forcing governments to print more money.Tesla continues to hold around 10,000 bitcoin—sometimes called digital gold—worth almost $800 million on its balance sheet, last week sparking fears it could be about to cash out when it suddenly moved its bitcoin to new wallets.
U.S. national debt has skyrocketed in recent years, crossing the $34 trillion mark at the beginning of 2024, largely due to Covid and lockdown stimulus measures that sent inflation spiraling out of control and forced the Federal Reserve to hike interest rates at a historical clip.
Earlier this year, Bank of America analysts warned the U.S. debt load is about to ramp up to add $1 trillion every 100 days—potentially fueling a bitcoin price surge—and could reach $36 trillion by the end of 2024.
"Under Trump, the deficit goes up by $500 billion per year; under [vice president Kamala] Harris' plan, it goes up by an additional $600 billion per year. I have a feeling all those are just pipe dreams," said Tudor Jones, who earlier this year warned of a "debt bomb" in the U.S. as a result of "fiscal recklessness."
In 2020, Tudor Jones helped kick off the Covid-era bitcoin and crypto bull run when he came out as one of Wall Street's first bitcoin-backers, calling it the "fastest horse to beat inflation."
