‘Financial Emergency’ in the US, says Elon Musk; what’s the fiscal bomb about?

The debt crisis of the US government has been a topic of heated debate for years and now one of the world’s richest and most influential man Tesla boss Elon Musk has described the debt obligations of the government akin to a “financial emergency”. Incidentally, just the interest payments of the government have surpassed $1 trillion a year, which is more than the much-vaunted entire defence budget of that country.

Musk is a close follower of the Republican candidate in the impending US presidential election and has thrown his weight behind Donald Trump. While addressing an election rally in support of Trump, Elon Musk emphasised how more and more tax payments of the US citizens are being channelised towards debt servicing.

US debt crisis is a ticking bomb

He said as much as 23% of the entire federal tax revenue is consumed by debt obligations. The total debt of America has jumped to $35.7 trillion, which incidentally is more than 9 times the GDP of India. According to reports, the debt is growing by leaps and bounds and is projected to rise by $1 trillion every 100 days. In this process, it could hit the $36 trillion mark by the end of this year.

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Like several other countries the US debt is partly attributable to the economic stimulus that the government of the country undertook to ameliorate the hardships during the Covid 19 pandemic. As a result, the US Fed had to raise interest rates simply in order to rein in the inflation that followed from the fiscal measures. Economists have forecast that deficit figures would keep rising.

Pushing up gold prices

While the sky-high debt of the US government is generating a lot of heated debate in the run-up to the presidential elections, it has also paved the way for different outcomes such as crowding the alternative assets market, which has taken the price of gold to new peaks. The same is true for cryptocurrencies such as Bitcoin.

According to reports, Tesla has a lot of investment in Bitcoins and shows $800 million worth of it in the accounts of the company. There has been a lot of speculation about Tesla selling them since it recently transferred its holdings to new wallets.