As we find ourselves caught in the debate over whether A-shares will surge to 4,000 points and become a bubble, a more alarming financial landscape is unfolding in the United States. In a staggering sign of fiscal expansion, the U.S. national debt has skyrocketed by one trillion dollars in just three months, now exceeding a mind-boggling total of 36 trillion dollars. This figure marks a new historical threshold and raises the eyebrow of even seasoned financial analysts.

Oddly enough, the American public remains largely unfazed by this dramatic inflation of debt. It seems that our counterparts across the Pacific have perfected the art of creating financial bubbles and are now contemplating innovative solutions. One such speculation is that Bitcoin might be employed as a means of repaying U.S. debts. This could signify not just a strategic move but a fundamental shift in how national debts are approached.

The scale of U.S. debt is nothing short of staggering, representing about 130% of the nation’s Gross Domestic Product (GDP). While several countries, such as Japan with its debt-to-GDP ratio of 250%, have seen higher proportions, the dollar's status as the world's dominant currency affords the U.S. a wider leeway. The phenomenon allows the U.S. to inflate its currency more freely, effectively passing the costs onto the global community, much like shearing sheep in a pasture.

What is particularly alarming is the acceleration in which this "shearing" has taken place. Leading up to the 2008 financial crisis, U.S. national debt was below 10 trillion dollars. Fast forward 16 years, and an additional 26 trillion dollars have been added. The growth curve of this debt is astonishing and suggests systemic issues that may have far-reaching implications.

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The Debt Crisis in the U.S. Grows More Intense

In the face of this soaring debt, confidence in the dollar faces potential erosion. Likely exacerbated by recent geopolitical tensions, such as the ongoing conflict between Russia and Ukraine, the United States' decision to freeze Russian dollar assets has led to a significant shift in global central bank behaviors. Since 2022, central banks around the world have purchased over a thousand tons of gold annually, effectively doubling their pre-existing metrics and reaching unprecedented levels. This palpable move suggests a growing desire to diversify away from dependence on the dollar.

However, the U.S. must grapple with a dual dilemma: it needs to maintain confidence in the dollar while also addressing the soaring interest payments on its national debt. Currently, the Federal Reserve's yearly interest payments surpass 1 trillion dollars, even eclipsing defense expenditures. Carrying this burden in the context of high-interest rates is increasingly unmanageable for the federal government. Though deferring interest payments might appear feasible through continuous deficit spending and additional currency issuance, doing so will only exacerbate the existing debt spiral.

In a typical situation, such conditions might lead to a collapse of the monetary system. Instances of economic failure are often accompanied by the issuance of new currencies, akin to the "Gold Yuan" notes introduced by the Kuomintang, where one Yuan equated to 3 million old currency units while gold and silver ownership was prohibited. This maneuver ultimately contributed to the Kuomintang regime's demise.

Is Bitcoin the New Gold Yuan?

Currently, the U.S. finds itself in a somewhat analogous position. However, it is essential to recognize the ingenuity with which the U.S. continues to navigate financial crises. Unlike the Kuomintang's blunder, the prospects for Bitcoin offer a more sophisticated alternative.

The advantages of this potential maneuver are manifold. Firstly, Bitcoin already enjoys a broad-based acceptance globally; numerous nations recognize it as a legitimate currency, diverging from the unfounded nature of the Gold Yuan.

Secondly, Bitcoin’s total market capitalization stands at approximately 1.92 trillion dollars, surpassing silver and ranking as the seventh-largest asset worldwide. Such scale is crucial – it positions Bitcoin as a viable tool in addressing U.S. debt challenges.

Moreover, the U.S. possesses a commanding influence over Bitcoin. Approximately 28.9% of global Bitcoin mining power is concentrated in the hands of American companies, with that share continuing to grow. While some detractors argue that private entities, rather than the government, control Bitcoin, the federal government currently holds around 200,000 Bitcoins—about 1% of the market—mostly confiscated through criminal proceedings.

In a nation rife with hacking expertise, acquiring Bitcoin through various means is relatively easy. High-profile cases of cryptocurrency theft highlight the manipulability of these assets, signaling that the U.S. could establish a firm grip on Bitcoin’s trajectory.

Additionally, Bitcoin's roller-coaster volatility presents opportunities for speculative trading. A rise from its current 1.92 trillion-dollar valuation to 10 trillion dollars is not entirely inconceivable, making it a plausible asset for settling federal debts as the situation evolves.

The Case for Gold as a Counter to U.S. Financial Hegemony

In conclusion, observing the intricate financial strategies deployed by the United States over the years invites both admiration and apprehension. While many criticize financial bubbles as detrimental, for the global leader in finance—the owner of the world’s reserve currency—creating repeated bubbles serves as a modus operandi to harvest wealth from the rest of the world, often willingly offered up to the U.S. coffers.

From this perspective, unwaveringly embracing gold becomes the ultimate recourse for non-Western nations. It stands as the most effective weapon against the financial sovereignty wielded by the U.S. As we look ahead, the long-term outlook for gold remains remarkably optimistic.

Lastly, to touch on a practical matter, back on November 15th, during a significant dip in gold prices, I advised buying in on the low. Within a week, gold prices rebounded by more than 5%. It remains to be seen how many took that advice.