Coinbase CEO Brian Armstrong's Bold Fix for America's $39.7 Trillion Debt Crisis (Hint: It Involves Bitcoin.)
Armstrong's third idea has some historical support. The U.S. didn't pay down its World War II debt through austerity. It grew the economy instead. AI and robotics might generate enough growth to outpace the debt accumulation.
Could AI deliver on that promise? It's the most plausible of Armstrong's three proposals, though "I hope technology saves us someday" isn't exactly a fiscal plan. Then again, it's hard to squeeze a detailed economic analysis into a single X post.
The uncomfortable truth
Governments can solve debt problems through some combination of growth, inflation, spending cuts, and tax increases. Growth is the only option anyone actually likes. Inflation technically helps (debt gets cheaper in real terms), but try telling voters that $5 eggs are good fiscal policy.
Spending cuts and tax increases are always hard to swallow. This explains why the debt keeps growing regardless of which party controls Congress or the White House.
Armstrong is right that the incentive structure is broken. Bitcoin backing wouldn't fix it, though. Asset-backed currency just reshapes the fiscal pain of avoiding the three unpopular methods. When that pain becomes acute enough, countries abandon the standard.
This is, again, exactly what happened with gold. Sorry, Mr. Armstrong. Even if Bitcoin had enough market value to make this work, the fiscal constraint wouldn't last long.
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Anders Bylund has positions in Bitcoin. The Motley Fool has positions in and recommends Bitcoin. The Motley Fool recommends Coinbase Global. The Motley Fool has a disclosure policy.
Coinbase CEO Brian Armstrong's Bold Fix for America's $39.7 Trillion Debt Crisis (Hint: It Involves Bitcoin.) was originally published by The Motley Fool
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