The idiot Republicans in the US congress just massively increased spending. Over the next few years, the yearly deficit will probably double from $600 billion to $1.2 trillion as a result. I have very little faith in congress, and there's a long history of the Republicans and Democrats working together to recklessly increase both military and domestic spending, but even I was surprised by just how ridiculous this spending increase was.
Previously most people would say that although they didn't want to balance the budget this year, in the future it could be balanced. Republicans would sometimes lay out plans to balance the budget in 15 years or some such nonsense. But people will soon be realizing that this is never going to happen now. In a few years just the interest on the debt will be 5% of GDP or more, and this will grow exponentially.
I think that this will come to a point of crisis within the next decade. How do you guys see things playing out? Several possibilities come to my mind:
- The US prints money like crazy, probably to the point of hyperinflation.
- The US explicitly defaults on its bonds. This'd basically be armageddon for everything in contact with the fiat financial system (eg. banks, stocks, retirement funds, etc.), worldwide.
- Taxes are massively increased. Income tax increases probably wouldn't be sufficient; they'd probably need a national VAT of 15-25% to even begin to bring the budget in order. But there are serious political and legal impediments to such a thing.
- I really can't see them cutting spending in any significant way, but maybe it'd be possible if tons of politicians were replaced and/or the crisis grew large enough.
What I'd recommend they do is default on the bonds and just live with the few years of massive fallout, while simultaneously cutting spending massively. But there's very little chance of that. The hyperinflation route seems most likely to me.
(In any case, it's probably good for crypto...)