Roving Periscope: With a $36 trillion debt, the US facing a “financial emergency,”
Virendra Pandit
New Delhi: Ahead of the crucial November 5 presidential elections in the US, whose outcome is uncertain, Tesla chief Elon Musk has stunned America which, he said, is facing “bankruptcy.”
Musk, the world’s second wealthiest man with a net worth of USD 195 billion, has emerged as a key player in the 2024 US presidential elections, giving unprecedented support to Republican Donald Trump’s campaign against Democratic candidate and Vice-President Kamala Harris.
Observing that Trump could fix the US economy, he has flagged the huge debt burden of nearly USD 36 trillion on America, and labeled it as a “financial emergency.”
Musk, who has also funded Trump’s campaign, has repeatedly warned in recent weeks that the US is teetering on the brink of “bankruptcy.”
His fresh remarks came during a recent Trump rally when he raised concerns about the soaring USD 36 trillion national debt and its potential impact on the economy, labeling it a ‘financial emergency’ in the US, the media reported on Tuesday.
In a post on X (formerly Twitter), Musk said, “Just the interest payments on the debt are 23 percent of all federal tax revenue,” pointing out that interest payments alone now surpass the Defense Department’s USD 1 trillion annual budget.
The national debt, currently at USD 35.7 trillion, has been on a steady rise, with estimates suggesting it could hit USD 36 trillion by year-end. Bank of America’s analysts indicate that the current trajectory means an increase of USD 1 trillion could occur every 100 days.
The rise in debt is linked to unprecedented stimulus measures implemented by the Biden Administration during the COVID-19 pandemic, which aimed to support the economy amid lockdowns. While these initiatives alleviated immediate economic challenges, they also contributed to inflationary pressures, prompting the Federal Reserve to undertake significant interest rate hikes.
This chain reaction created persistent fiscal challenges, resulting in a ‘nightmare scenario’ for the Federal Reserve as it grapples with inflation management alongside the rising debt costs, the reports said.
As both debt and inflation continue to rise, there is a noticeable shift among investors toward alternative assets like Bitcoin and gold. Bitcoin’s value has recently reached its previous high of USD 70,000, and gold prices have similarly surged as investors seek refuge from what Musk and others view as an impending financial crisis. Musk recently supported Bitcoin investments.
Under his leadership, Tesla has held a significant investment in Bitcoin, with around 10,000 coins valued at nearly USD 800 million. Recently, Tesla’s decision to transfer its Bitcoin holdings to new wallets has fuelled speculation in the market, with some analysts questioning whether the company is preparing to sell a portion of its assets in the face of economic volatility, the media reported.
Bitcoin, often dubbed ‘digital gold’, has gained traction among investors wary of rising inflation and debt levels. Musk’s strong advocacy for Bitcoin, along with Tesla’s considerable holdings, shows a broader trend among major investors seeking alternatives to traditional assets amid current economic uncertainties.
With the national debt on the rise and ongoing deficit projections, analysts said that the annual debt could increase by USD 500-USD 600 billion, contingent upon future US policies.
