Bitcoin Forum

I know that folks like Warren Buffett / Alan Greenspan told us the US will never default on its debt but just in theory, how much impact the default will have on BTC and crypto? Should we even worry that "printing" will stop?

https://www.yahoo.com/video/warren-buffett-explains-the-simple-reason-why-the-us-will-never-default-on-its-debt-185105213.html

There's more than one scenario of this happening though.

If the US economy is still growing and they decide not to repay their debt then bitcoin will probably do nothing (the market in general might become a bit more volatile and us companies would have to hold bonds in other currencies with other governments in order to continue functioning but that might be it). If it triggers a run on all the government bond markets and everyone's forced to pay up, countries like the UK and the Netherlands might be seen as safe haven places as they are two good examples of countries that offer to buy back bonds very quickly when their economy becomes unstable or uncertain (I think most of the EU is capable of this too and the bloc might function as one big bond buyer of its own bonds - like a few countries have always wanted).

If the US stagnated or started to decline and then defaulted on its debt this might crash bitcoin only if the effects were felt globally or the US had the most buying pressure on it.

The more worrying part of the US defaulting on its debt is the fact that it'll damage the dollar either way. Printing trillions of dollars to repay debt might hurt it less than defaulting.

There's the other option that the US might have indefinite bonds that means they might never default (as long as the interest is paid but it could be paid in new bonds as long as a buyer can be found).

As the article clearly states, the US government is the owner of the money printer, so there is no US government default and the USD is also the currency of the world, they will print as much as they want to deal with if their country has a problem. The US is considered the economic center of the world if they default, you should know that everything will fall apart and cryptocurrencies are only a small part of the world economy. It's still not something big enough to withstand any economic turmoil in the world.

No, they'll never stop printing money.  

They get to devalue their debts while fattening their pocket book.  It's a cycle that will go on until we are all completely dependent upon the government to provide for us.  The only hope is separating money and state.  Bitcoin has already gotten farther than I thought it would in it's attempt to do just that, but I feel like the battle is just beginning.  Most likely the dollar will continue to be devalued throughout our lifetimes, and the check won't come due for another generation or two.  At that point, may God help those who were not already prepared for the worst.

That's one thing of the reason why some country's being put on a high debt, by the way, what's with the gold right now?
as far as I remember these paper's aren't now backed by gold as also the quantity doesn't match up on how many they print.

Bitcoin will be effective in any economic equation if it exceeds 20 trillion market capacity, we are now sitting at a barrier of less than 1 trillion, much less than it will affect the economies of countries, even less than companies such as Tesla, Saudi Aramco, Apple and Microsoft.

Assuming US will default on loan means there is a serious economic crisis or they are in war. Crypto market will surely plummeted since US controls a significant protion of global economy and its a major disaster that they will defaulted on there loan. I know some of us will think that price will pump if this happened since people will find alternative currency to get out on USD but the actual scenario will be worst and I think people will still choose different currency as first option rather than Bitcoin since the world will surely in panic when that time comes.

US is probably one of the only countries that is impossible to default on their debt because they are the reserve currency and they can print all they want. The US was in dept for decades and will be for more decades, nothing will change. They will never default.

Other countries are different. I think there will be more QE in the European countries due to what is happening to these bond yields. And if this is happening frequently you will see the pairs such as BTC/GBP and BTC/EUR appreciate more in value and that means many are hedging their money in currencies like crypto and gold due to the QE that these central banks have no choice but to do.

They already have soft defaulted but a hard default is a failure to repay even the nominal amounts.    USA will always repay the nominal but obviously we are aware the value of returns is not correct, inflation is above the bond returns hence easily possible a negative return.     Its known to some extent what happens, to repay its debt in the 1920's Germany printed new money which is quite familiar to present events imo; we get massive volatility for many years.

On a related note, yesterday I saw that according to the US National debt, every US citizen would owe almost $100k, and if we only count taxpayers, almost $250k. This does not seem very sustainable, especially if we take into account the deficit, and that the negative numbers keep growing.

https://www.usdebtclock.org

So far, things have been sustained by a forward flight, as the world's richest and most powerful nation and having the dollar as a reserve currency, but the debt cannot continue to increase ad infinitum.

Regarding the possible scenarios, I think there are two, and a priori we cannot know which one would end up happening: that the Bitcoin would fall precipitously and deeply in price, or that in the face of the crisis the Bitcoin would become a refuge and rise in price. I think it would be a mixture of both: a first downturn to rise quickly, as happened from March 2020.

There is not too much of a point in discussing this because this will never happen, the US can just print money and pay their debts and obligations with freshly printed money, now such a thing will cause massive inflation and a massive lost of trust on the US dollar on the international markets, but if things get to that point the US will do it as they will have no other choice anyway, and in that scenario I expect the price of bitcoin to skyrocket as people desperately try to find a store of value in which they can save their wealth.

We will switch to this:

https://m.media-amazon.com/images/P/1119473861.01._SCLZZZZZZZ_SX500_.jpg

Commodities (such as wheat, oil, gas, gold, copper etc.) will be priced in sats.

That's the endgame of BTC.

There are lots of people pointing out that the Fed can just endlessly print money to fund the debt, which is true, but no mention of the debt ceiling.

We are continuing to rack up more and more debt at an ever increasing rate. The very day to day running of the country is absolutely dependent on us taking on more and more debt. We can endlessly devalue the dollar to pay that debt, sure, but there is always the debt ceiling to consider. The debt ceiling currently sits at $31 trillion, and we are rapidly approaching it again. Usually it is raised each time without issue, but occasionally one party likes to refuse to raise it in order to force through some legislation or gain concessions on some bill. If it cannot be raised to fund not only the ongoing functioning of the government, but also the payments on the already existing debt, then the government will shutdown.

Usually such disagreements are resolved within a few weeks, but not without leaving hundreds of thousands of people without pay and costing the economy billions of dollars. Temporary measures can be put in place to free up some money to fund core departments and continue to pay the existing debt. A prolonged shutdown would exhaust these temporary measures, however, and would also lead to a default on the debt.

As to the effect on bitcoin, who can say? We would be facing an enormous financial crisis, with enormous cuts across the board and millions of job losses.

I agree with you, bitcoin was not the perfect choice at the time. US default would be a global crisis and a broken dollar would be the death of the world economy. Before the USD was chosen as the world currency in the 20th century, many other countries used the gold standard as their primary unit of exchange. If that happens, I think gold will be the option at that point and a new currency will come along with it. There is only one possibility of US collapse if the EU joins hands with China and Russia, but that will never happen.

US will collapse when China invades Taiwan (because -TSMC- reasons)... there's nothing Uncle Sam can do about that.

Any counterattack will instigate WW3.

Interesting read:

https://adventuresincapitalism.com/2022/10/09/the-fed-is-fuct-part-4/

How America failed to pay debts when they were the biggest lender to other countries. If they failed, of course, the countries that owed it would be in a pinch. Besides, who controls the amount of USD printed in each year? America says it has the most foreign exchange reserves. Even if they really can't afford to pay the debt, of course there's no bigger effect on crypto, except for Tether which has a USD rate.

Any war can bring many countries into a big mess, even US will suffer for sure.
US wont suffer such default loan, it’s too impossible to happen because they all have the reserve to handle this issue and I’m sure they are already working to control their economy as they continue to increase the interest rate. Let’s just hope for a better economy soon because many can’t stay on this situation longer.

It is clear that they can't just print as much money as their debts, we are talking about trillions of dollars and that is impossible to handle by just printing. They did something like 4 trillion total within the span of a few years and we saw how horrible the inflation became and how much interest rate FED had to increase.

This is why I believe that we shouldn't be really guessing that they will print it. However they are making enough money to pay it back when they have to, and just create a bigger debt for later on while keep growing, that’s not a bad strategy and I believe that it will definitely be something that would work out for them for many decades.

Honestly, it's all just baseless speculation, the possibility of US default is impossible, they have built their empire since the 2nd world war and it must be said that they are so powerful that no one can break their monopoly.
No one wants war to happen, it affects not only a few countries but it affects every part of the world, our family is also experiencing shortages, energy, goods, everything has increased in price from 15% to 20%. We are continuing to have bad days after the pandemic and now the crisis, I pray everything will be back to normal soon.

Really?

History has taught us that all empires fall eventually...

Ancient Rome, Byzantine, Ottoman Empire. See a pattern here?

Even global reserve currencies tend to change like clockwork every century (Portugal, Spain, France, Great Britain, USA, China and/or BTC coming next?).

Not true.

WEF wants a war to advance their Great Reset agenda (Putin has been invited by WEF many times before the Ukraine war started). They're not as romantic as you are. They are ruthless and thirsty for power/total domination.

"The powers that be" also wanted a war 80-100 years ago and it happened (WW1/2).

History repeats all the time. It's a huge fractal, just like the stock/crypto market.

But what if they default the loan intentionally and there are no wars and other serious economic crisis? Therefore I don't think crypto will collapse but U.S dollar might be since many are going to dispose it due to their hate in the U.S and like you said, people will look for alternatives and they may consider crypto so cryptos value can feel an increase after that.

I don't think the world will panic because of it but if they do then any markets can get affected with it including the cryptos. For now, let us wait if what will be the decision of the U.S but I still believe that they will pay whatever debts they have as I see them as a strong and rich country.

Option 1.
USA defaults. The US dollar value crashes and the people in the US will start buying any asset they can in order to get rid of their dollars. Maybe some of them will buy Bitcoins, so the Bitcoin price could go up.
Option 2.
The USA defaults, so the foreign and domestic creditors, who own US bonds will go bankrupt and this will start a global recession/depression.
This would lead to massive price crashes on all financial markets, including the cryptocurrency markets. This means that the Bitcoin price might crash as well.
Those two options are hypothetical and I really don't know what will happen if the USA defaults. ;D

if they intentionally default on their debt, they certainly have a bigger plan behind them, not simply defaulting to harm themselves, while they are the number 1 power in the world. so in case they do it on purpose, crypto will not be an option for everyone unless the US government controls it or they want that to happen

the US is the country that owns the USD printer, and the USD is dominating the world, so they can print as much as they want to pay off their debt. in other words they are the country that exports inflation to other countries

Yes, they (WEF) do have a bigger plan... it's called "The Great -Currency/Debt- Reset".

They will introduce CBDCs after fiat currencies collapse (due to hyperinflation).

They will erase ALL debt (public/private), as long as you concede your property rights (houses, cars etc.) to them (WEF techno-feudalists). ;)

That is the key, US has a lot of power, and even during this period we have seen Europe go into recession earlier, and we have seen 1 euro being equal to 1 dollar even though euro is used by all of Europe (almost) and dollar is based on just one nation. That should tell you how big dollar is and how strong USA is, and that should be something we need to address because we cannot allow just one nation to be that strong. It just doesn't make sense to give them that much control over the world and do whatever they want.

The debt is a good proof, everyone trusts them so much and have no other option that, they accept USA with so much debt, which is unacceptable.

I think the EU countries are aware of this but sadly after the 2nd world war most of the countries in the EU region depended on the US from economic to military and now they know the US is taking advantage of them but they have no choice. Inflation is happening all over the world but with the high USD rate, this is good for the US. Countries that owe the US are paying more than they used to. I don't like China because they really are not much better but with the rise of China, hopefully world power will be more balanced when America alone controls the world.

Europe do not "need" USA, but it just works better for them financially, and they all come from the same Roman times western ideology that works for them. Rome was a period where people realized they could have their own voices heard, even when there were kings in Rome, they would kill them to bring it to republic all over again, so they realized long time ago that it is the people that matters, Europe and USA have that in common.

In other parts of the world the king was the one that mattered, they worshiped kings like gods, unlike the French who would just revolt for example, or USA who would go independent from the king, this difference allowed them to be allies, and just give USA the power to take over certain stuff, like military.

Although the United States is ranked 39th in terms of debt, the United States cannot be compared with other countries, even though the ratio of US debt exceeds the output of the US economy, but that doesn't mean the US is unable to pay for all of that, that's another issue that needs to be worried about, as far as I know the United States is able to pay off the debt which is estimated to be around US$ 28.788 trillion, the recorded history of the US for decades has never defaulted.

In terms of speculation on the development or impact of Crypto/Bitcoin cannot be associated with US debt, that is wrong, crypto is not only used in the US, crypto is included in the development of the world, US debt and crypto are different methods, completely unrelated, because crypto is not controlled by the US like US$.