The US federal debt, which is currently approaching US$ 35 trillion or 1200 % of GDP, is alarming a growing number of economics and financial analysts. Prior to defence spending and rights, interest payments on the debts have grown to be the most important item in the US federal budget.
In earlier June, previous US House Speaker Paul Ryan proposed that the US government may recognize stablecoins, resource- backed bitcoin, as settlement for US Treasuries. According to Ryan, the initiative would lead to an “immediate, tough increase in demand for US debts, which would lessen the chance of a missed debt auction and an ensuing financial and economic crisis.”
Ryan’s plan serves as a testament to how serious the US loan issue has grown. Cryptocurrencies were conceived as anti- stablecoins currencies. They are modern currencies that are privately issued and can be used anywhere in the world in an anonymous manner. Bitcoin, the first bitcoin, was meant to be a system for a new economic system that could start with a clean slate.
In the US, as of 2024, crypto advocates are calling for the regulation of asset-backed cryptos ( stablecoins ) so that they can be used to buy US Treasuries and pay taxes. Cryptocurrencies may be able to save the imperfect financial system that they were supposed to replace.
US Congressman Matt Gaetz introduced a bill that would allow Americans to give their federal income tax in Bitcoin two days after Ryan submitted his plan. Gaetz claimed that the dramatic change would encourage creativity, increase efficiency, and give Americans more freedom.
This is a courageous step in the direction of a future where digital currencies are essential to maintaining the US’s position as a leader in scientific development, according to Gaetz.
Is it possible for a fiat currency to survive with personally issued currencies? In the last 50 years, the dollar lost 90 % of its value, and it is still losing money annually at a rate of about 10 %.
Altcoins vary widely in price, but almost all of them are priced in dollars. They are therefore susceptible to a potential ( some economists say unavoidable ) devaluation of the dollar.  ,
Bitcoin Pizza Day
A bit of bitcoin history. A computer programming using the pseudonym Satoshi Nakamoto published a report on a crypto bulletin board on October 31, 2008, to proclaim Bitcoin, the first peer-to-peer cryptocurrency. People may “mine” Bitcoins by completing complicated mathematical puzzles and receive rewards for the newly created coins.
Nakamura argued that the economic system was corrupt and benefited a tiny elite by using taxpayer money to bail out Wall Street in 2008. Bitcoin would be the person’s income, beyond the power of governments. It may make it possible to pay someone anywhere in the world almost completely for free.
Just 21 million Bitcoin could be mined, making fiat currencies defense to inflation brought on by overwhelming money stamping, a criterion found in fiat currencies.
In 2010, Bitcoin recorded its first commercial exchange. Who delivered two pies to his Florida residence in the form of a Bitcoin worker named Laszlo Hanyecz offered 10, 000 BTC to him?
American computer Jeremy Sturdivant accepted the offer. He had two pies delivered to Hanyecz’s house at a cost of$ 25, and Hanyecz transferred 10.000 bitcoin to Studivant’s Bitcoin budget. Bitcoin was valued at$ 0.0041 during the transaction.
Currency’s initial purchase, remembered as Bitcoin Pizza Day, generated broader involvement in the modern money. Entrepreneurs started crypto exchanges to facilitate the purchase and sale of cryptocurrencies, and they invested in server farms to stone cryptocurrencies. In a simple 15 times, Bitcoin’s cost went from almost zero in 2009 to a maximum of  ,$ 75, 830 in early 2024.
Bitcoin’s potential as a pay method was unsuccessful. Just a small percentage of Bitcoin transactions are made for retail use. The remainder involves crypto investing.
Crypto companies have created a number of different kinds of altcoins. Among them are bitcoins. Some cryptocurrencies are backed by assets like real estate, corporate debts, and even other cryptocurrencies, people are backed by reserves of stablecoins assets held in bank transactions. A bitcoin named DigixDAO has a” stain backed by physical gold” that is supported by 1 ounce of silver that is stored in a bunker.
Ironic is the rise of cryptocurrencies that are gold-backed. The US government’s decision in 1971 to remove the money from the gold standard was largely responsible for the difficulties in the financial system, which allegedly contributed to the development of Bitcoin.
The consists
After WWII, the US dollars became the global reserve currency. The dollar was purged from gold at a fixed price of$ 35 per ounce under the Bretton Woods Agreement of 1944.  , The English lb, the French franc and assets of different countries were pegged to the money, and hence indirectly to silver. By limiting the amount of money that can be issued, metal resources impose fiscal discipline on nations.
In the 1960s, many European nations expressed concern that the US state was damaged financially, which was the outcome of a pricey war in Vietnam and the introduction of social plans ( the War on Poverty ). Economists in Europe speculated that the US was printing more money than gold had again.
The French state made its issues known in a serious manner. It demanded ore in exchange for sending a warship full of dollars to New York. Many other countries followed suit, albeit without ships, and they progressively drained US silver resources.
At the end of World War II, the US had 21 measurement tons of gold. In 1971, just 8.133 plenty remained. The US government announced that it would temporarily shut the so-called golden windows, defaulting on the Bretton Woods Agreement, in order to lose its remaining property.
In exchange for military protection, the US in 1974 persuaded Saudi Arabia to buy all of its oil in dollars to maintain the worldwide demand for the currency. The deal mandated that all oil-importing countries keep dollar reserves, leading to an ever-increasing demand for dollars.
The so-called petro-dollar strengthened the status of the US dollars as the world supply money. The oil trade represents only 7 % of the global economy, but it is essential to the other 93 % of the economy.
Exploding loan
The US government has quickly increased its bill, no more constrained by the restrictions imposed by the gold standard. In 1971, US debt was$ 400 billion, in 2024 it reached$ 34 trillion, or 120 % of GDP.
To fund its shortfalls, the US government issues attention- bearing Treasuries. Backed by” the full faith and credit” of the US state, Treasuries have been regarded as a risk- completely purchase. The major customers were private owners, international institutions, pension funds and insurance companies.
But history is repeating itself. In the late 1960s, France was concerned about the US silver deposits. Currently, China is concerned about US Treasuries.
China developed a sizable trade surplus with the US, bringing in at one point$ 1 billion a day net as it became the factory of the world. China became the world’s largest borrower to the US with a portion of its dollar to buy US Treasuries, joining Japan and Japan as the only other country to do so.
Next came the renowned Wall Street loan and the global financial crisis of 2008. China came to the conclusion that the US lacked the desire to control its investing or overhaul its political or economic system. China eventually cut back on its US bill purchases throughout the 2010s. Also, it started to lay the foundation for an alternative economic structures.
De-dollarization
Om 2021, China, Hong Kong, Thailand and the UAE announced they were developing mBridge, a digital alternative to SWIFT ( Society for Worldwide Interbank Financial Telecommunication ). Importantly, mBridge is based on a variation of bitcoin, the technology used in most bitcoin.
mBridge is designed to work with Central Bank digital currencies and serves as the most good case study for a monetary settlement system for the BRICS nations. The Cooperation Council for the Arab States of the Gulf ( GCC), comprising Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and the UAE, has tested its own CBDC Bridge that will be connected to mBridge.
BRICS is also developing a trading forex system that could be backed in part by silver, oil, and other supplies. The biggest obstacle to the money has been a gold or oil-backed currency. Despite their strange appearance, golden and petrol have remained close to balance for more than a century. Their individual rates move within a very small area.
In 1971, when the US closed the golden window, an ounce of gold sold for$ 35. It reached$ 2, 450 in first 2024. In 1971, a barrel of oil was$ 3.60. In recent years it has traded between$ 80 and$ 100 a barrel. Measured in silver and oil, the money lost about 90 % of its value in the last 50 years.
If the BRICS introduces a coin that is pegged to gold, it might have an impact on the prices of everything from copper and gold to aluminum and the crucially important rare earths used in natural technology.
A developing BRICS will not only be the largest manufacturer of many industrial and consumer goods, but also have the ability to control a sizable portion of international assets. The latest BRICS people ‘ complete economic output has already surpassed that of the G7.
Saudi Arabia made the announcement to visit both BRICS and mBridge in June of this year. The Saudis had now begun selling non-dollar oil, but the statement made it clear that their commitment to the petro-dollar had come to an end.
The Saudi choice elicited a reaction from Michael Saylor, inc- founder of crypto big MicroStrategy. According to Taylor, the Saudis were making a error and should have chosen Bitcoin otherwise.
He wrote:” Picture a planet where 50, 000 businesses use cryptocurrency with P2P settlements with each other. Ask the Bank of Australia, the Bank of Austria, or the Bank of China if they would n’t like to have an asset that does n’t lose 7 to 10 % of its value annually. Ask them if they would n’t prefer to be able to make deals with any other banks in the world, peer- to- gaze. It’s an advancement over the existing system”.
Saylor perhaps knows better. Why do countries in the BRICS, including Saudi Arabia, China, and other BRICS nations, exchange their goods or commercial goods for dollars while deviating from the money system?
Crypto or metal?
Severe forms of economic engineering have made the US debt problem worse. Introducing bitcoin into the monetary system takes this a significant step further. Cryptocurrencies can be used secretly and across borders, making it ideal for duty evasion. It was, according to scholar Michael Hudson, change the US into” the new Switzerland”.
Hudson wrote:” The US sees acting as the place for the country’s tax evaders, criminals and others as a good regional strategy. The intention is not to criticize tax violence and more violent criminal acts, but to make money by serving as lender for these activities.
The US has three options, according to macroeconomist Luke Gromen, none of which are painless: it must reduce defence spending and privilege by at least 30 %, it is partially mistake, or it can fill the bill, barring a productivity miracle caused by AI or a breakthrough in cheap energy. Only in a national incident, which may lead to years of incredibly high inflation, are the first two options politically feasible.
Also, says Gromen, the US will have to re- flourish to reduce its reliance on foreign companies for even the most simple of items. The second US president will need to develop an commercial policy, or, better still, a national strategy to reimagine society.
In the short term, there is no reason for optimism. Donald Trump, a former US president, granted cryptocurrencies. He has pledged to chastise nations that stop using the money and that his reelection strategy accepts donations in bitcoin.
That does n’t sound like a plan. Reserve economies are on the verge of extinction. They are still present in the colonial period.