What Bitcoin Did

View Original

The Debt Spiral with Preston Pysh & James Lavish

Peter McCormack

Interview | Description | Timestamps | Show Notes

See this content in the original post

iTunes | Google | Spotify | Stitcher | SoundCloud | YouTube | Deezer | TuneIn | RSS Feed

Your browser doesn't support HTML5 audio

The Debt Spiral with Preston Pysh & James Lavish - WBD722 Peter McCormack

Download Episode MP3 File
The file will open in a new window. Click down arrow to download the file.

See this content in the original post

Preston Pysh is a co-founder of The Investor Podcast Network and James Lavish is a macro analyst. In this interview, we discuss the US’s increasing debt and its impact on the economy, as well as the cycle of debt and inflation that many people find themselves trapped in. We also talk about the challenges of promoting Bitcoin adoption in economically unstable countries and the need for stable currencies in those countries.

- - - -

US national debt has increased over 80 times in the last 100 years, rising from $404bn in 1923 to $33.17tn in 2023. In the 1920’s the US was paying off debt used to finance the country’s involvement in WW1 that had resulted in its debt to GDP ratio surging to 33% by 1919; by 1923 this ratio had been reduced to around 25%. Today, debt to GDP is over 120%, higher than after WW2.

The current issue is a result of two main structural economic problems that have manifested since the 1970s. Firstly, debt increased rapidly, from just under $3tn in 1971, to over $10tn in 2000, and to $20tn in 2010. However, GDP grew at a much slower rate over this period. Central Banks have therefore had to let inflation rise to cover the gap, with interest rates being the tool they use to control inflationary pressures.

Inflation is effectively a tax that disproportionately affects the poorest people in society. As vining costs rise, personal debt climbs: people struggle to keep up with their expenses due to inflation and resort to using credit cards. Increasing interest rates only worsens their financial situation. As their credit deteriorates, they are offered even higher interest rates, creating a vicious cycle that often leads to bankruptcy. Many people are trapped.

The real problem is that the national debt, believed by many to have reached unsustainable levels, doesn’t look set to be reduced anytime soon. For example, there has been a staggering increase in the national debt over the past two weeks amounting to $500bn. This debt is used to pay for government activities and funding numerous programs. But increasingly, it is needed to also pay the interest on that debt that is expected to be $663bn this year and $1.4tn by 2033.

Credible people on Wall Street are discussing the debt spiral. Corporate earnings are expected to decrease due to the lagging effect of the Fed raising rates. Private investors are also starting to wake up to the fact that debt and inflation will have an increasingly erosive impact on wealth. Owning assets like gold, silver, and Bitcoin can help protect against it. It is more important than ever to understand the situation that is evolving.

See this content in the original post

Coming Soon…

See this content in the original post

SUPPORT THE SHOW

If you enjoy The What Bitcoin Did Podcast you can help support the show by doing the following:

If you are interested in sponsoring the show, you can read more about that here or please feel free to drop me an email to discuss options.

SPONSORS

See this content in the original post

Connect with Preston:

Connect with James:

Mentioned in the interview:

Other Relevant WBD Podcasts:

See this content in the original post