Is America About to Go Bankrupt? Elon Musk Claims There’s No Chance the US Resolves Its Debt Crisis

On Sunday, November 2, billionaire tech entrepreneur Elon Musk reiterated his caution regarding the fiscal situation in America. He indicated that the federal debt has escalated to such an extent that rectifying it would require a significant increase in productivity.

“If AI and robots don’t address our national debt, we’re in trouble,” Elon Musk cautioned, raising new alarms that US financial stability may be approaching a critical juncture.

His statement gained traction following fresh media coverage of a recent podcast appearance, at a time when the national debt has surpassed $38 trillion, with interest expenses remaining elevated.

It surged from $37 trillion in August to $38 trillion by October 22, representing the quickest $1 trillion rise outside of pandemic times, coinciding with an ongoing federal shutdown.

US government statistics indicate that total public debt reached about $38.11 trillion as of October 30, according to the Treasury’s “Debt to the Penny” ledger.

(Source: Congressional Budget Office)

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Does Issuing Debt in US Dollars Shield America From Bankruptcy?

The FY2025 deficit was estimated at around $1.8 trillion, based on the Congressional Budget Office’s projections.

A significant part of the issue is the interest costs. Budget analysts indicate that these payments have at times equaled or exceeded some of the largest national programs in the last two years.

The Committee for a Responsible Federal Budget pointed out that interest expenses overtook spending on national defense and Medicare for a considerable portion of FY2024, and current monitors report interest costs gaining momentum toward $1 trillion in 2025.

The 10-year Treasury yield concluded last week near 4.1%, as per the Fed’s constant-maturity data.

(Source: Fred)

The gap between the 10-year and 2-year yields is now slightly positive after a prolonged inversion. Both indicate that borrowing will remain costly even if the economy slows down.

The recent monthly review from the Congressional Budget Office estimates the FY2025 deficit to be about $1.8 trillion. That constitutes approximately 6% of US GDP and remains largely unchanged from FY2024, even after factoring in tariff income and adjustments.

Long-term CBO projections suggest that federal debt owned by the public will increase from around 100% of GDP in 2025 to approximately 107% by 2029. The report warns that this share will keep rising if current regulations persist.

Critics argue that Elon Musk merely reflects concerns already present in bond markets: interest costs are now higher for the long term, and Washington’s ability to stabilize its finances is diminishing.

Conversely, others assert that the US isn’t on the brink of bankruptcy due to its ability to issue debt in its own currency and still enjoys strong global buyer interest. Nonetheless, they argue the nation requires a viable strategy to curb the escalation of borrowing.

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The article Is America On Verge of Bankruptcy? Elon Musk Says There’s No Way US Solves Debt Crisis first appeared on 99Bitcoins.