09/11 update below. This post was originally published on September 10
Elon Musk, the Tesla billionaire who tops Forbes’ rankings of the world’s richest people (at least for now), has flung himself back into his day job since leaving president Donald Trump’s White House.
Musk, who now holds $1.3 billion worth of bitcoin on Tesla’s balance sheet, helped Trump get reelected with his campaign rally warnings of looming financial disaster before quitting the administration amid a row over government spending and promising to create his own bitcoin-backing political party.
Now, after quietly signaling support for his “only” cryptocurrency, Musk has issued yet another warning over the spiraling $37 trillion U.S. debt pile.
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“At the end of the day, our national debt, which is insanely high … the interest payments exceed the Defence Department, I guess … sorry, War Department … budget and it’s rising, so if AI and robots don’t solve our national debt, we’re we’re toast,” Musk said during an interview at the All In Summit.
The U.S. debt pile has surged to $37 trillion this year, as a combination of huge Covid-era spending and higher interest rates contribute to what some fear could become a “crisis” for the U.S. dollar.
“The government is basically unfixable,” Musk added, later sharing a clip of the interview on the social media platform X that he bought and rebranded from Twitter.
09/11 update: The latest U.S. consumer price index (CPI) data has showed price pressure met expectations in August, putting the Federal Reserve on track to cut interest rates by 25 basis points next week—lifting the bitcoin price and wider crypto market.
Following the 2.9% year-on-year inflation reading, which all but guaranteed a Fed September rate cut, the price of gold hit an inflation-adjusted all-time high, breaking a record that’s lasted since 1980.
“Asset allocators are entering a period where they are justifiably concerned about the levels of both deficit spending, as well as questioning central banks’ priorities and willingness to truly fight inflation,” Robert Mullin, portfolio manager at Marathon Resource Advisors, toldBloomberg.
Gold’s 40% rally this year has left bitcoin and stock indices in the dust, though some expect bitcoin to play catch up in coming months as its “digital gold” narrative is bolstered by the Fed loosening monetary policy.
“Bitcoin offers something unique in this environment. Whether the Fed cuts 25 or 50 basis points next week, whether inflation reaccelerates or the economy softens further, bitcoin continues to attract capital as a hedge against multiple scenarios,” Gadi Chait, investment manager at Xapo Bank, said in emailed comments, pointing to “massive” $757 million spot bitcoin exchange-traded fund (ETF) inflows on Wednesday this week, the strongest since July.
“Our current situation is one where both gold and the U.S. stock indices are at all time highs, precisely because the money printer is about to get flipped back on. However, bitcoin is still 10% off its all time highs,” Lark Davis, the author of the Wealth Mastery newsletter wrote in an emailed note, adding bitcoin, “has the most asymmetric upside in this environment.”
Following his explosive exit from Trump’s White House, Musk confirmed wild rumors and speculation that his new America Party could adopt bitcoin, replying to an X user that asked: “Will America Party embrace bitcoin?”
“Fiat is hopeless, so yes,” Musk wrote, sending the bitcoin price higher, and referring to government-backed currencies known as fiat, rather than asset-backed currencies, which the dollar was before it abandoned the gold standard.
In June, Musk restarted his campaign against out-of-control U.S. government spending, backing a warning that bitcoin could “take over” from the U.S. dollar as the world’s reserve currency and leading to a public falling out with Trump over the president’s signature Big Beautiful Bill that is expected to add around $3 trillion the national debt.
“If the electorate doesn’t hold Congress accountable to reducing the deficit, and start paying down the debt, bitcoin is going to take over as reserve currency,” Brian Armstrong, the chief executive of crypto exchange Coinbase, posted to X in comments shared by Musk.
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Meanwhile, the increasingly unmanageable debt load has sparked wild speculation the U.S. government could try to “erase its massive debt at the world’s expense” and reset the financial system in its favor.
“The U.S. is now trying to rewrite the rules of the gold and cryptocurrency markets,” Anton Kobyakov, a top advisor to Russia’s president Vladimir Putin, said at the Eastern Economic Forum in comments translated by Russia Direct and posted to X. “Remember the size of their debt—$35 trillion. These two sectors (crypto and gold) are essentially alternatives to the traditional global currency system.”
Last year, during the election campaign, Trump floated the possibility of using bitcoin to pay off the U.S.’s $35 trillion debt pile, telling Fox Business that, “maybe we’ll pay off our $35 trillion, hand them a little crypto check, right?”
