Powell made these comments while testifying to Congress on Feb 26, adding that the increase in debt as a percentage of GDP is growing faster than ever.
According to past statements, Powell is of the opinion that the largest source of U.S. debt is the country’s healthcare system, which he believes is uniquely expensive as compared to that of other nations.
Bitcoin to the Rescue?
Cryptocurrencies such as Bitcoin are designed to be anti-inflationary. While the world’s largest cryptocurrency will have an annual inflation rate of only 1.8 percent next year, that number will continue to drop every time the Bitcoin block reward halves. This phenomenon, coupled with the digital currency’s limited supply of 21 million coins, means that more Bitcoin can never enter the market once all of it has been mined.
This is in stark contrast to fiat currencies such as the Euro and the US Dollar, where central banks have the power to print or generate more currency at will.
Meanwhile, Powell pointed out that the United States spends over 17 percent of its GDP on healthcare, while other countries only spend about 10 percent.
The national debt continues to grow every year, with estimates showing that the deficit could exceed 100 percent of the GDP by the early 2030s. The highest level recorded was 106 percent in 1946.
Powell on Cryptocurrencies
Powell does not believe that cryptocurrencies will have any impact on monetary policy in the US in the short term, given that they are not being used for purchases.
However, he does agree that a few digital currencies have a legitimate use case as a store of value asset.
According to him, investors have exercised some caution with respect to the cryptocurrency market, given their volatility over the past few years.
Even outside the US, the debt problem continues to spiral. Venezuela, for example, is currently facing hyperinflation, with no solution in sight. Peer-to-peer cryptocurrency exchanges in these fiat-inflated locations are taking off rapidly, with LocalBitcoins experiencing record volume within the past few months.
Do you think Bitcoin is the answer to the world’s debt problem? Let us know your thoughts in the comments below!
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