According to (Forbes) reports, Musk stated at a recent gathering that the $35.7 trillion debt bomb could very likely skyrocket Bitcoin's price to a market value similar to gold.

Currently, the U.S. government's annual expenditure reaches 6 trillion dollars, with more than 1 trillion spent just on interest payments for national debt.

Musk warns that this could lead to the U.S. government 'going bankrupt.'

Recently, the Federal Reserve further released news about interest rate cuts; every debt crisis has been resolved by releasing liquidity.

The Federal Reserve's interest rate cut cycle has actually been quite clear; first, it cut 50 basis points in September, and Powell later stated that there would be two more cuts of 50 basis points by the end of the year.

In September, during the month the Federal Reserve cut interest rates, global central banks collectively implemented 21 rate cuts, the highest since the COVID-19 pandemic and the third highest since the financial crisis.

Even the usually stable Chinese government couldn't sit still and announced the 924 new policy at the end of September, declaring to the world that we also want to release liquidity!

Since the decoupling of the dollar from gold, each large liquidity release requires a reservoir to absorb the released liquidity.

The 1970s saw a failure to find suitable reservoirs, leading to a long-term inflation rate (CPI) consistently above 10%.

That was an era when crude oil and gold prices soared, increasing about 20 times over a decade, which is the cost of lacking a reservoir.

After the 1980s, President Reagan realized the importance of reservoirs and absorbed liquidity in the market by massively issuing national debt.

The U.S. has just embarked on a new wave of takeoff; after the 1980s, the returns on U.S. stocks and bonds began to exceed those of gold and crude oil.

After the burst of the internet bubble, liquidity was absorbed through real estate.

After the global financial crisis, liquidity was again absorbed by U.S. stocks.

At the same time, U.S. Treasury bonds are also being printed on a large scale.

Why do some people believe that Chinese stocks will rise?

This is because China has long used real estate as a reservoir, and based on the attitude of the central government's 924 new policy, some believe they might choose the stock market as the next reservoir.

However, the U.S. faces a dilemma; after all these years, it can be said that traditional reservoirs like real estate, U.S. stocks, and bonds are also nearly filled, or more accurately, the increase in value has not kept pace with the speed of money printing.

Choosing the Chinese or Hong Kong stock market as a reservoir is not possible. At this time, new reservoirs are needed to absorb this liquidity.

The reservoir that the U.S. has chosen this time is very likely Bitcoin.

To be honest, if Bitcoin is really to generate an impact similar to gold, then developing the Bitcoin ecosystem to endorse various transactions on the blockchain may be a necessary path.

At the establishment of the Bretton Woods system, the reason the world accepted the dollar was precisely because the U.S. had over 70% of the world's gold reserves at that time.

Then many countries around the world purchase dollars as foreign exchange reserve assets.

Therefore, it can be considered that after World War II, the U.S. was pledging gold to print dollars.

Then many countries around the world pledge dollars to print their own currencies, which can also be seen as a re-pledging of gold.

So how was the gold-backed pledge ecosystem destroyed?

The main reason is that the settlement nodes are unreliable and have defaulted!

Exchanging currency for gold or silver, these precious metals, mainly depends on the credit of various countries.

In fact, government credit is often unreliable.

After the dollar was decoupled from gold in 1972, the dollars obtained by pledging gold could no longer be exchanged for gold.

Because at that time, all of America's gold reserves were insufficient to redeem the printed dollars, it can be seen as a default by the U.S. government.

In fact, it's not just the U.S. government; governments worldwide have historically used precious metals as the anchor for printing money. Not only have governments globally defaulted, but they have done so many times.

But is there a possibility that Bitcoin could succeed this time?

One advantage of Bitcoin over gold is that it has a more reliable settlement network.

Bitcoin pledge certificates require corresponding Bitcoin as sufficient collateral, and all this data is traceable on the chain. Unless a 51% attack is initiated, default is impossible.

Specifically, users pledge their own Bitcoins to earn staking rewards; it can be seen as users exchanging gold for dollars to purchase U.S. bonds.

Re-pledging is equivalent to using U.S. bonds as collateral to earn interest from other sovereign countries.

It’s just that the credit of sovereign nations is unreliable, so the failure of gold as the anchor of global currency occurred.

However, the consensus around gold has not disappeared; it is just that the global settlement nodes are unreliable.

And the nodes of Bitcoin are much more reliable than those of gold~