The scale of US debt has exceeded 36 trillion dollars. Can Bitcoin become the future international settlement currency?

At the beginning of the new year, the scale of US national debt has surpassed 36.4 trillion USD. How will the US debt crisis be resolved, and can the international hegemony of the US dollar be sustained? How will Bitcoin react, and what will be the future replacement of international settlement units?

Starting from the debt-based economic model of the United States, we further explore the debt risks faced by the internationalization of the US dollar today, and analyze whether the US debt repayment plan is feasible. Looking at the past and present, let's see how US debt guides Bitcoin's direction.

Establishment of the US Debt Economic Model

After the collapse of the Bretton Woods system, the hegemony of the US dollar rapidly developed in the debt-based economic model.

The Bretton Woods system collapsed, and the US dollar became a fiat currency.

After World War II, the Bretton Woods system was established, linking the US dollar to gold and forming an international monetary system centered around the dollar. However, the "Triffin Dilemma" accurately predicted the disintegration of this system: the contradiction between the growing demand for international settlement and the stability of the dollar. In 1971, the dollar decoupled from gold, transitioning from a commodity currency to a fiat currency, backed by the credit of the United States.

The debt economic model is established, and the dominance of the US dollar continues.

On this basis, the United States established a debt economic model: global trade is settled in US dollars, the United States maintains a trade deficit, and other countries acquire US dollars; countries around the world purchase US government bonds and financial products to achieve the repatriation of US dollars. The US dollar, as the world currency, is supposed to maintain value stability, but the United States can change the value of the dollar according to its own interests. The hegemony of the US dollar is sustained through the debt economic model.

The internationalization of the US dollar faces risks

The US dollar faces risks from the economic model of US national debt and commercial real estate debt.

is contrary to the internationalization of the dollar and the return of manufacturing.

The debt-based economic model of the United States supports the internationalization of the dollar, but it is not sustainable. The Triffin dilemma still exists: the internationalization of the dollar requires maintaining a trade deficit, which may lead to increased risks associated with U.S. debt; promoting the return of manufacturing may cause the dollar to appreciate, hindering its role as an international settlement currency. Dollar hegemony and the return of manufacturing are difficult to achieve simultaneously. In the short term, it is unlikely that the trade deficit will fundamentally change, and the dollar is primarily under depreciation pressure.

Commercial Real Estate Debt Crisis

Apart from the risks associated with government bonds, commercial real estate also has debt risks. It is expected that by 2026, the vacancy rate of office buildings in the United States will rise to 24%. By 2030, the demand for office space in major cities around the world will decrease by 13%, and the global market value of office properties may shrink by 800 billion to 1.3 trillion dollars.

Small and medium-sized banks in the U.S. have a high proportion of commercial real estate loans, reaching 44%. $1.5 trillion in commercial real estate liabilities will mature next year. If small and medium-sized banks encounter problems, it could trigger a financial crisis.

Analysis of US Debt Repayment Plans

How to resolve a debt crisis? Borrowing new debts to pay off old ones is obviously not advisable. The following analyzes the feasibility of several repayment plans.

Sell gold to repay US debt?

The Federal Reserve holds about $704.3 billion in gold, accounting for about 10% of its total assets. However, selling gold to pay off debts is not feasible. Gold is an internationally accepted currency and plays an important role in stabilizing currency and responding to crises. Selling gold would weaken the financial influence of the United States and lead to a liquidity crisis in U.S. debt, which would be counterproductive.

Sell Bitcoin to repay US debt?

Trump once proposed using Bitcoin to erase US debt. However, there are many issues with this:

1. The acceptance of Bitcoin checks is not high, and some countries may not accept them.

2. The 12 billion US dollars of Bitcoin held by the United States is far from enough to repay the 36 trillion US debt.

3. The establishment of Bitcoin reserves is controversial, which may undermine confidence in the dollar and trigger a crisis. Even if established, it can only postpone the debt collapse.

Is the US dollar anchored to Bitcoin?

There is a view that the US dollar can be linked to Bitcoin to solve the huge US debt problem. However, this would threaten the internationalization of the US dollar:

1. Anyone can issue currency using Bitcoin, similar to the era of wildcat banking.

2. Bitcoin is highly volatile, which can affect the stability of the US dollar.

3. The United States has insufficient Bitcoin reserves, and its monetary policy is constrained.

Manipulating the US dollar through Bitcoin?

Some believe that the U.S. can manipulate Bitcoin like it does gold, thereby controlling the U.S. dollar. But this is unrealistic:

1. Bitcoin is decentralized and cannot be manipulated like gold.

2. Bitcoin is influenced by international factors, making it difficult to effectively control.

3. Even if the price of Bitcoin is suppressed, funds may not necessarily flow into the US dollar.

Sacrifice creditors Japan and Jewish consortium?

Difficult to achieve in the short term. The cooperation between the US and Japan continues, as both sides still have strategic needs. However, the challenge of overcoming the Jewish consortium is too costly, which may accelerate economic collapse and is difficult to realize.

The Impact of the Debt Crisis on International Settlement Units

The inability to repay US debt and soaring inflation have brought a financial crisis to the brink. Bitcoin has fallen in line with the market in the short term, but may become a safe-haven asset in the long run.

Bitcoin short-term decline

Currently, Bitcoin is closer to a high-risk asset, and investment demand will decrease at the beginning of a financial crisis.

Bitcoin becomes "Noah's Ark"

In the long run, Bitcoin is expected to become a safe haven in times of crisis:

1. Strictly scarce global liquid assets, long-term value storage means.

2. After the crisis, investor trust is rebuilt, and Bitcoin's independence is highlighted.

After the collapse of U.S. Treasury bonds, the world may welcome a new wave of Bitcoin adoption.

Can Bitcoin Become the Future International Currency?

After the collapse of the dollar system, Bitcoin is expected to become the next generation international settlement currency:

1. As a trading medium, Bitcoin operates around the clock, without geographic limitations, efficiently capturing global liquidity.

2. The function of value scale is continuously expanding, capable of measuring the value of various goods and services.

3. As mining progresses, the value storage function will be enhanced.

4. Currently, there is no other fiat currency that can replace the US dollar, traditional finance may be questioned.

5. Bitcoin has the highest consensus among cryptocurrencies and is widely recognized.

In summary, Bitcoin has the potential to become the next generation international Settlement unit, and its future development is worth looking forward to.