Is the United States a "Zombie Country?" - WiM Weekly
A weekly rundown of new WiM podcast releases and some food for thought
A “zombie company” is a business that generates just enough revenue to stay operational, but lacks the profitability needed to repay its debts or invest in expansion. Zombie companies rely on debt to survive. They can trudge along in low-interest rate environments, but when interest rates rise and borrowing becomes more expensive, they struggle to secure new loans and often go bankrupt.
Much like zombie companies, the U.S. faces its own financial struggles with a growing national debt. While the government can sustain its spending in a low-interest rate environment, rising interest rates create a similar dilemma, making it harder to manage debt and fund essential programs without further borrowing. While the U.S. generates approximately ~$4 trillion annually in revenue, spending currently exceeds $6 trillion, resulting in a ~$2 trillion deficit.
What steps can be taken to make this deficit more manageable?
Cut spending
Lower interest rates
The U.S. cannot easily cut its spending because much of its debt, like Social Security, is signed into law. Cutting spending would be an effective default.
Instead, the market expects interest rates to be lowered. By making borrowing cheaper, the U.S. can continue rolling its debt into the future without interest payments spiraling (completely) out of control. Rising asset prices signal widespread skepticism about the government's ability to reduce deficits. In essence, the market is calling the government's bluff. Cutting spending is implausible, leaving lowering interest rates as the only option to sustain current spending without “going bankrupt." As asset values increase, so do capital gains taxes—the largest source of government revenue—further incentivizing officials to implement monetary policies that drive asset prices higher.
Rising asset prices in real estate, stocks, gold, fine art, and Bitcoin doesn’t sound so bad for the top 1% of Americans who own ~33% of all assets. Sit back, do nothing, and get obscenely rich … surely it can't be that simple, right? Of course it’s not that simple. Higher asset prices disguise the reality of the dollar’s steadily depreciating purchasing power. As Bitcoiners, we can all agree on one thing: there’s no such thing as a free lunch.
So the real question is, who’s paying for asset holders to do nothing and become nominally wealthier? The harsh truth—those who save in dollars, work for wages, or live on fixed incomes are the ones footing the bill. The suckers at the table are the ~173,000,000 Americans that own almost zero assets.
There's a hole in the U.S. balance sheet. With a domestic debt-to-GDP ratio of ~130%, we’re drowning in debt with no growth to pay it back. Someone has to realize this loss. The government's and monetary authorities' clear plan is for the average American to bear the burden of this loss.
To the ~50% of Americans with no assets, not all hope is lost. Bitcoin allows anyone to become an asset holder. You can buy a fraction of a penny's worth, hold it without paying property taxes, and secure it from anywhere in the world, with no counterparty or dilution risk. Someone has to fill the hole in the U.S. balance sheet—don’t let it be you.
Study Bitcoin. Tell your loved ones about Bitcoin. Get off zero.
This Week:
WiM518 with Eric Weiss
"Having a true bearer asset is very challenging. Even if your bearer asset is physical, it can be taken away from you by force. In a lot of ways, Bitcoin really is the perfect property because you can truly own it. It can't be taken from you, and you can access it or take it anywhere in the world you want, to any jurisdiction, and pass it forward in time. It's incredibly powerful in that way, but it does require thinking a little bit differently." — Eric Weiss
Link to full episode: How to Think About Bitcoin, AI, and Our Economic Future with Eric Weiss (WiM518)
WiM519 with Obi Nwosu
"Fedi combines the most fundamental human technology of community with freedom technologies like Bitcoin, Lightning, eCash, Nostr, etc. to level up humanity. And that’s the realization—[community] combined with the digital technology of freedom technologies—that’s what leads to something magical happening." — Obi Nwosu
The full episode with the Obi Nwosu will go live today (10/4/24) at 3:00pm EST.
We’ve relaunched the Clips Channel! Subscribe for highlights from episodes and other exclusive content:
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Next Week:
10/8 with Aneesh Karve
Aneesh Karve is the co-founder and CTO of Quilt well-versed in data visualization, entrepreneurship, and Bitcoin.
10/11 with Robert Breedlove
Robert will explore René Girard's mimetic theory, uncovering insights into human behavior, desire, and social dynamics.
Join me on Jekyll Island and The Farm this November 15-18 for an unforgettable experience.
This November 15-18th, 2024 (in what feels like a ‘coming full circle’ of sorts for me) I will be giving a talk on the nature and history of money at the Jekyll Island Club in the exact same room where the now infamous secret meeting was held to found The Fed way back in 1913. Then, we will be doing some fun activities on The Farm!
For those of you that don’t know about The Farm, it is a 1000-acre food, energy, and water independent community 45 minutes northwest of Jacksonville, FL. Words can hardly do justice to the beauty and majesty of The Farm, you’ll just have to come see it for yourself…
Click here to learn more about this event or email Will@okefarm.com today to apply to join us for this once in a lifetime trip!!!
Sponsors:
The Farm at Okefenokee (mention BREEDLOVE for $21,000 off a custom cabin): https://okefarm.com/
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Products I Endorse:
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Noble Protein (discount code BREEDLOVE for 15% off): https://nobleorigins.com/
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Colorado Craft Beef (use discount code BREEDLOVE): https://coloradocraftbeef.com/
Superb