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The U.S. economy could 'collapse' following a debt crisis; Bitcoin and crypto may help rebuild afterwards - Max Borders

Kitco News

(Kitco News) - According to the St. Louis Federal Reserve, the U.S. debt-to-GDP ratio is 125 percent. Research by economists Ken Rogoff and Carmen Reinhart suggests that a debt-to-GDP ratio in excess of 90 percent causes slower economic growth and may trigger a public debt crisis.

Max Borders, Executive Director of Social Evolution, is worried about more than. Speaking with Michelle Makori, Anchor and Producer at Kitco News, he said the U.S. economy could experience a total "collapse," due to its unsustainable debt levels.

He said that preppers, people who prepare for extreme collapse by stockpiling food, guns, and other essential supplies, are admirable.

"I am more and more, every day, starting to admire the preppers," he told Makori at the FreedomFest 2022 conference in Las Vegas. "The one thing that I see that portends an awful state of affairs is that the greatest economic power in the world's debt stands at [125 percent] of GDP."

Riots in the streets

Referring to recent events in Sri Lanka, in which food and fuel shortages led to civil unrest, Borders said that he foresees a similar fate for the U.S.A.

"That is the sort of thing that I worry about, and it doesn't have to be the entire population," he explained. "It could be a sizeable enough subset to make matters very dire for us all."

Borders is skeptical of the ability of fiscal and monetary policy to solve problems, saying that the economy is a complex ecosystem. He likened economic policy to "[sticking] your hand into the Amazon rainforest or The Great Barrier Reef, and [trying to] run those complex systems… you cannot run, fix, or design a complex system."

He added that U.S. citizens have come to expect handouts when the economy goes awry, meaning that the U.S. debt burden is unlikely to be reduced.

He said, "austerity measures have worked, but what is the political incentive? When everybody's crying about gas prices, they want some form of stimulus. They want something akin to what they got during COVID, and they've come to expect it. The political class is going to give that to them."

FreedomFest 2022 U.S. Energy Panel, moderated by Michelle Makori

Bitcoin as a solution?

After the collapse of the U.S., Borders is optimistic that a better system will be built.

"We can reconstitute institutions that work better," he said. "[Bitcoin] was a response to the problems of 2008 and 2009 that were sewn by government and people who were excessively greedy… [Back then], we saw the advent of the Bitcoin whitepaper that Satoshi Nakomoto published."

Because Bitcoin is decentralized, Borders claimed that people can use it to "opt out" of dollars, and "anything that's denominated in dollar assets." He also called Bitcoin "the soundest money in the world."

"I'm not a Bitcoin maximalist… but I have a very strong appreciation for Bitcoin," he said. "Its soundness makes it the center of any good portfolio, but cryptocurrencies have other properties and those are continually evolving in a greater churning ecosystem of value."

To find out Borders's views about gold and the gold standard, watch the above video.

Follow Michelle Makori on Twitter: @MichelleMakori

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Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.