• FED chair very worried about the growing debt
• Increasing interest rates are making debt levels worse
• Bitcoin offers the best alternative currency in an economic crisis

The United States’ total national debt has hit $21.9 trillion, and Federal Reserve Chairman Jerome Powell’s worry is growing alongside the crisis. Bitcoin is likely to become a haven during the impending financial storm.  

The Fed Chief made his comments recently while addressing the Economic Club of Washington DC during a panel talk even as the country’s annual deficit is said to reach a new high of $1 trillion, something economists are worried is likely to create trouble for future generations.

While annual deficits have gone beyond the $1 trillion mark in the past, it never happened during times of sustained economic growth, and there is a rising concern of the possibility of tough times should the prevailing circumstances cause a recession. Expressing his fear, Powell said:   

“From the Fed’s standpoint, we’re really looking at a business cycle length: that’s our frame of reference. The long-run fiscal, non-sustainability of the U.S. federal government isn’t really something that plays into the medium-term that is relevant for our policy decisions.”

Increasing interest rates

Powell’s fear regarding the rising debt levels is coming at a time when there are fears of a global economic slowdown as investors worry amidst strong economic data including a robust labor market. Out of the about $21.9 trillion U.S. debt, it is estimated that $16 trillion is owed to the public. Powell’s main worry is that because of continued interest rate increases, the cost of interest on the debt is likely to become an unbearable burden. Powell said further about the impending crisis:

“It’s a long-running issue that we definitely need to face, and ultimately, will have no choice but to face.”   

A viable alternative

Historically, when countries are in the midst of economic crises, they are bound to tighten their financial thumbscrews. Governments almost always impose capital controls on their people that end up backfiring and prevent their populations from doing some things we take for granted such as getting cash out of their bank accounts. It’s in such a situation when Bitcoin and other cryptocurrencies could become the go-to alternative for people in those economies.   

Every time people lose faith in a currency the predictable reaction is to look for another currency. In the past money has flung to what was supposed to be the most stable currency, the US dollar but Bitcoin has several advantages over fiat currencies. There is evidence that people are distrustful of central banks and want a currency that’s easy to obtain and isn’t controlled by a central authority, and only the Bitcoin fits that bill.