(Kitco News) – According to the St. Louis Federal Reserve, the US debt-to-GDP ratio is 125%. Research by economists Ken Rogoff and Carmen Reinhart suggests that a debt-to-GDP ratio above 90% slows economic growth and can trigger a public debt crisis.
Max Borders, executive director of Social Evolution, worries more. Speaking to Michelle Makori, presenter and producer at Kitco News, he said the US economy could experience a total “collapse” due to its unsustainable level of debt.
He said preppers, people who prepare for extreme collapse by stockpiling food, guns and other essential supplies, are admirable.
“I’m starting to look up to preppers more and more every day,” he told Makori at the FreedomFest 2022 conference in Las Vegas. “The only thing I see that portends a terrible situation is that the world’s biggest debt economic powerhouse is standing in [125 percent] of GDP.”
Riots in the streets
Referring to recent events in Sri Lanka, in which food and fuel shortages led to civil unrest, Borders said he foresees a similar fate for the United States.
“That’s the kind of thing that worries me, and it doesn’t have to be the whole population,” he explained. “That could be a big enough subset to make it very serious for all of us.”
Borders is skeptical of the ability of fiscal and monetary policy to solve problems, saying the economy is a complex ecosystem. He compared economic policy to “[sticking] your hand in the Amazon rainforest or the Great Barrier Reef, and [trying to] run these complex systems… you cannot run, fix or design a complex system.”
He added that American citizens have come to expect handouts when the economy turns sour, which means the US debt burden is unlikely to be reduced.
He said: “The austerity measures have worked, but what is the political incentive? When everyone is crying over petrol prices, they want some form of stimulus. They want something like what ‘they got it during COVID, and they expect it. The political class is going to give them that.’
Bitcoin as a solution?
After the collapse of the United States, Borders is optimistic about building a better system.
“We can rebuild institutions that work better,” he said. “[Bitcoin] was a response to the problems of 2008 and 2009 that were sewn up by the government and people who were excessively greedy… [Back then]we saw the advent of the Bitcoin white paper that Satoshi Nakomoto published.”
Because Bitcoin is decentralized, Borders claimed that people can use it to “withdraw” dollars and “anything denominated in dollar assets.” He also called Bitcoin “the strongest money in the world”.
“I’m not a bitcoin maximalist…but I have a very strong appreciation for bitcoin,” he said. “Its strength makes it the center of any good portfolio, but cryptocurrencies have other properties and these are continually evolving into a larger ecosystem of value.”
For Borders’ perspective on gold and the gold standard, watch the video above.
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