US Debt Crisis: The Role of Bitcoin Amid Expanding Fiscal Concerns

The financial landscape presents an unsettling reality as discussions around President Trump’s One Big Beautiful Bill unfold. With projections threatening to add over $2.4 trillion to the already staggering US debt, the country’s economic stability hangs in the balance, raising concerns over inflation and the devaluation of the dollar.

Inflation and currency devaluation seem to be the path of least resistance for the US economy, steadily eroding the real value of cash and bonds. As billionaire hedge fund manager Ray Dalio points out, abrupt currency devaluations often accompany debt crises, and the signs are increasingly impossible to ignore in the current climate.

Billion-Dollar Budget Deficits and Unfulfilled Promises

The US budget deficit surpassed an alarming $6 trillion in 2024. Despite promises from figures like Elon Musk to curb spending, only $180 billion was trimmed from the expected $2 trillion. Meanwhile, interest rates sit at 4.5%, spurred by concerns that ongoing trade wars will further inflate prices. The yield on 10-year Treasurys remains stubbornly above 4.35%.

As Trump’s Big Beautiful Bill passed through the House and awaits Senate deliberation, it is replete with provisions that echo past GOP initiatives. Spanning over 1,100 pages, the bill proposes extended tax cuts from 2017, the cancellation of Biden’s green energy initiatives, and heightened immigration enforcement. Most critically, it raises the debt ceiling by an astounding $5 trillion.

According to the nonpartisan Congressional Budget Office (CBO), this legislation would ultimately decrease federal revenue by $3.67 trillion over the next decade while achieving only $1.25 trillion in spending cuts—resulting in a net increase of $2.4 trillion in debt, pushing the total beyond $37 trillion. If interest payments are factored in, the costs could soar to as much as $5 trillion.

While some supporters argue these tax cuts will catalyze economic growth, historical context suggests otherwise. Data from the 2017 tax cuts indicates a $1.9 trillion increase in the federal deficit, despite optimistic spending forecasts.

Growth and Debt: An Impossible Equation?

The narrative that the US can simply “grow out” of its debt crisis seems increasingly unrealistic. As Sina, co-founder of 21st Capital, aptly noted, the US economy would need to achieve an extraordinary 20%+ real GDP growth annually for a decade to alleviate this burden without structural reforms.

The first quarter of 2025 even reported a negative growth rate of -0.3%, with projections suggesting modest growth at 3.8% for Q2. This paints a bleak picture for any immediate recovery reliant solely on increased GDP.

Veteran economist Kenneth Rogoff has advised that deficits are set to eclipse 7% of GDP for the duration of Trump’s term, absent any unforeseen disruptions. Hence, the only feasible growth now appears to be nominal—a troubling indication of fiscal health.

As Ray Dalio elaborates, governments facing severe debt crises have four options: implement austerity measures, declare defaults, redistribute wealth, or resort to printing money. The latter, while politically palatable, often leads to silent currency debasement, erasing the wealth of savers and bondholders alike. Dalio emphasizes the importance of understanding currency risks in investing.

Bitcoin: A Hedge for the Future

In this precarious economic environment, Bitcoin emerges not as a speculative asset but as a critical tool for financial security. With the potential for the US to inflate its way out of debt, traditional safe havens like Treasurys and cash could diminish in value.

Bitcoin’s design allows it to resist such monetary manipulations. With a capped supply and independence from governmental policies, it presents a compelling alternative that fiat currencies simply cannot match. The need for self-custody becomes paramount; relying on custodial platforms poses significant risks during financial upheaval, particularly if those platforms are unable to honor redemptions.

To truly safeguard assets, adopting practices such as cold storage, private keys, and full control of holdings is vital. As Rogoff states, the current trajectory of US fiscal policy lacks direction, and the political landscape shows little interest in rectifying these challenges until they escalate into a full-blown crisis.

As the likelihood of the Big Beautiful Bill becoming law rises, so does the potential for a severe debt crisis. In such a scenario, hard assets stored in self-custody could hold unprecedented value. The future of personal finance, particularly for investors and crypto enthusiasts, hinges on understanding these dynamics and preparing accordingly.