Yearly US deficit will be at least 6 times lower than Bitcoin market cap

Compiled by the U.S. Congressional Budget Office (CBO) and shared by crypto hedge fund manager Travis Kling on Jan. 21, data reveal that the annual deficit is set to hit $12.2 trillion for the entire 2020s. Data on the fiat economy shows that the average budget deficit of the US will be less than $1 trillion per year in the future or 4.5% of GDP.

Deficit due to GDP share up 55% in 50 years

The CBO commented when releasing the projections last September that such deficits would be significantly higher than the 2.9% of GDP that deficits averaged over the past 50 years. $1 trillion is much higher than six times the market cap of Bitcoin (BTC) and four times the market cap of all cryptocurrencies combined. 


U.S. average budget deficit 1969-2029. Source: CBO

Kling, who like other Bitcoin proponents has stated clear distinctions between the cryptocurrency and fiat currency through the data.

The deficit is not the only worrying matter of U.S. economic policy to rise in the surface in recent months. Late last year, it increased that the country’s total debt was higher than ever at $23 trillion, while the world’s total debt was $255 trillion, meaning $12.1 million for each Bitcoin.

In other words, budget deficits explode when the value of a country’s spending higher than the value of its revenues. As Kling points out, governments can use fiat to plug the difference, offering them the money supply ability which they can then direct as desired. Over the New Year period, the Federal Reserve (Fed) added $425 billion to the dollar supply, according to its statement.

Printing fiat to offset deficits never has a good ending

The process comes from Keynesian economics, which suggests for states and central banks to manage the money supply rather than letting the market decide prices for goods and services. The setup creates a problem known as the “Impossible Trinity”, meaning attempting to get free capital flows, a fixed exchange rate between currencies and independent monetary policy.

Kling tweeted that suppose the attraction when a politician of promising your constituents all the spending they want, whoever having to raise taxes. He concluded that this has been applied several times before in monetary history and there is no example where it ended well.

As Saifedean Ammous explains in his book, “The Bitcoin Standard,” preventing the governments interfere and central banks would reverse the processes which lead to deficits. The reason is fiat would cease to be money “by decree” as its name implies, and would operate without a central authority like Bitcoin.

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