The U.S. Debt Crisis and the Future of Bitcoin

As the scale of U.S. national debt surpasses 36.4 trillion dollars, how to resolve the U.S. debt crisis and whether the international hegemony of the dollar can continue has become a hot topic. This article will explore the risks facing the internationalization of the dollar from the perspective of the U.S. debt economic model and analyze possible solutions for U.S. debt repayment, thereby looking forward to the role of Bitcoin in future international settlements.

The Formation of the Economic Model of US Debt

After the collapse of the Bretton Woods system, the US dollar became a fiat currency, with its value guaranteed by the credit of the United States. Based on this, the United States established a debt-based economic model: global trade is settled in US dollars, and the US maintains a huge trade deficit to export dollars overseas; countries purchase US Treasury bonds and American financial products to realize the return of dollars. This model has strongly sustained the hegemony of the US dollar.

Risks Faced by the Internationalization of the US Dollar

The internationalization of the US dollar faces two major risks:

1. Contrary to the manufacturing repatriation policy. The internationalization of the dollar requires maintaining a trade deficit, while the repatriation of manufacturing will reduce the deficit, leading to the appreciation of the dollar, which is unfavorable for its role as an international settlement currency.

2. Commercial real estate debt crisis. After the pandemic, the demand for office space has declined, and American commercial real estate faces risks that may trigger a crisis for small and medium-sized banks.

Analysis of US Debt Repayment Plan

• Selling Gold: Gold reserves are crucial to the influence of the United States, and selling will trigger a liquidity crisis in U.S. debt.

• Using Bitcoin: The U.S. Bitcoin reserves are insufficient, and establishing reserves faces many challenges.

• The dollar is anchored to Bitcoin: this will threaten the international status of the dollar, and the United States will not take action.

• Manipulating the US dollar through Bitcoin: The decentralized nature of Bitcoin makes manipulation difficult.

• Strike against creditors: In the short term, the US and Japan still need to cooperate, and the cost of challenging the Jewish financial consortium is too high.

The Impact of Debt Crisis on International Settlement

If a US debt crisis breaks out, Bitcoin will fall in the short term along with the financial markets, but the long-term outlook is positive:

1. The scarcity of Bitcoin will highlight its hedging properties.

2. People are losing confidence in the traditional financial system, and Bitcoin is becoming more attractive as an independent asset.

The Possibility of Bitcoin Becoming an International Settlement Currency

Bitcoin has the potential to become the next generation of international settlement currency:

1. The trading medium is powerful, enabling 24/7, cross-border, and decentralized trading.

2. The function of value measurement is continuously improving, and application scenarios are continuously expanding.

3. The value storage function increases as the supply decreases.

4. Has the most widespread consensus and influence in cryptocurrency.

Overall, the US debt crisis may reshape the international monetary landscape, and Bitcoin is expected to play an important role in future international settlements.