Elon Musk has issued a stark warning about the US economy. On Thursday, the tech billionaire tweeted, “America is headed for bankruptcy,” citing a record $204 billion surge in debt. However, this is not the first time that the SpaceX founder expressed concerns about the country's growing debt and increasing rates. Last month, he made a similar remark, adding that “everyone seems to be sort of whistling past the graveyard on this one.” Here are five reasons why he may be correct:
Record surge in federal debt
“Federal debt explodes on 1st day of the new fiscal year, jumping $204 billion to new record of $35.669 trillion, but it gets worse: Treasury also had to draw down its cash balance by $72 billion—that's over $275 billion in the red for just one day,” reads a tweet shared by EJ Antoni, an economist with the conservative Heritage Foundation.
Musk's secret meeting with El Salvador's president
In September, the Tesla CEO had a secret meeting with El Salvador's Bitcoin-backing President Nayib Bukele. “We talked a lot about the nature of reality, future of humanity and how technology like AI and robotics will affect the world. El Salvador has an amazing leader,” Musk wrote at the time.
{{/usCountry}}In September, the Tesla CEO had a secret meeting with El Salvador's Bitcoin-backing President Nayib Bukele. “We talked a lot about the nature of reality, future of humanity and how technology like AI and robotics will affect the world. El Salvador has an amazing leader,” Musk wrote at the time.
{{/usCountry}}A bullish trend for Bitcoin after US election
“As both Republican and Democratic parties do not appropriately address the ever-increasing U.S. debts and deficits during this election, this will be very bullish for bitcoin especially post the U.S. election,” said CK Zheng, chief investment officer of crypto hedge fund ZX Squared Capital, per Cointelegraph.
Bank of America's ‘$1 Trillion every 100 days’ warning
Analysts for Bank of America warned earlier this year that the US debt load is set to add $1 trillion every 100 days— reaching $36 trillion by the end of 2024, according to Forbes. “The U.S. national debt is rising by $1 trillion every 100 days,” Michael Hartnett, chief strategist of Bank of America, wrote in a note to clients seen by CNBC.
BlackRock CEO issues ‘crazy’ fed warning
Following Musk's meeting with Bukele, BlackRock's chief executive, Larry Fink, said, “The amount of easing that’s in the forward curve is crazy.” Meanwhile, analysts David Brickell and Chris Mill told their newsletter readers to “expect fireworks” in terms of stock market trading. “The steps taken from China this week will unleash a tsunami of liquidity. Alongside the Fed more aggressively cutting and a global easing cycle, we’re pumping in anticipation of that, but against this short term liquidity drain,” they wrote, per Forbes.