Omkar Godbole
5 min read
Last month, CoinDesk discussed in detail how bond market activity is challenging the notion that the U.S. government is good for money, raising questions on the long-held "kayfabe" or illusion of fiscal stability.
Now, billionaire tech entrepreneur Elon Musk has raised the alarm on X through his [perhaps rightful] diatribe against President Donald Trump's big, beautiful tax bill, which is projected to boost the fiscal deficit by $2.4 trillion over ten years.
That's happening at a time when mounting fiscal concerns are already driving investors away from U.S. assets and into alternatives, such as bitcoin and gold. As of FY 2024, the fiscal deficit stood at $1.8 trillion, and as of today, the national debt is already at $36 trillion, with annual interest payments amount to $1.13 trillion.
Someone as influential and popular as Musk taking fiscal concerns public could result in two things: First, it could accelerate the shift away from U.S. assets. Is it merely a coincidence that at a time like this, corporate treasury adoption of bitcoin and other tokens, including XRP, has picked pace?
Secondly, investors concerned about the government's fiscal health are likely to demand a higher inflation-adjusted yield to lend money to the government. So, expect yields to remain sticky on the higher side, further complicating the fiscal situation and economic growth.
Bitcoin BTC believers, have been warning of this day for a long time. To paraphrase a former CoinDesk employee, "Crypto may not have all the right answers, but it does ask correct questions."
The popular narrative has been that the U.S. government is bankrupt, and the dollar is headed for a collapse. According to Musk, the government risks bankruptcy if fiscal prudence isn't restored.
In theory, the government has been bankrupt for decades. That's evident from the repeated debt ceiling lift-offs over the years.
Congress set the first federal debt limit at $45 billion in 1939, granting the Treasury wide discretion over the use of borrowing instruments as long as the total debt does not exceed the self-imposed limit.
Since then, the ceiling has been repeatedly hit and raised, a sign of fiscal crisis and, in many ways, form of hiding bankruptcy. As of 2025, the debt limit stands at $36 trillion! That's right trillion.
This brings to my mind a joke by an Indian standup comedian about government officials artificially raising the danger mark during floods, to create the illusion of control and normalcy.
