The U.S. Federal Deficit Is Unsustainable: What Will Happen?

There is a chart showing the U.S. Federal deficit and how much debt the U.S. Federal government has accrued over time. In 1980, the number was about $1.2 trillion. Today, in 2023, the number is about $32 trillion. This is unsustainable and something will take its place.

Projected Debt

In the next 50 years, the deficit is projected to be about 500% of GDP. Let's look at the historical values of GDP that it has been:

• 1980: Debt to GDP was 26%
• 2023: Debt to GDP was 123%
• 2040: Debt to GDP will be well over 300%

Currently, the U.S. ranks 7th for the highest debt to GDP in the world. This isn't a top 10 list you want to be a part of. Eventually, something has got to give and so far, each generation of president and political party has simply "kicked the can" and not addressed this problem.

Holders of Debt

Many different people hold this debt from the U.S. Here's the breakdown of that:

• Japan and China are the top two countries that own U.S. debt
• The total amount owed to foreign investors of its national debt is $7.3 trillion
• When you buy a treasury bill, you are increasing the U.S. federal debt
• Just paying the debt is one of the biggest expenses for the federal government

Eventually, this isn't going to be sustainable without the government printing enough money to pay the debt, which will cause inflation to run rampant, which will greatly weaken the U.S. dollar.

I see cryptocurrency, something that is not run by a government as a replacement to this, but it will only happen when the pain of using government currency is so great that a revolution occurs. When this is, is anybody's guess.

Do you think cryptocurrency will replace government currency?