Kim Dotcom, the tycoon of the scandal, is under the control of the New Zealand government and the United States after the fall of Megaupload in 2012. Kim said the US dollar was in a "cyclone of death" could not save because of the US debt. So, according to Kim, it's time to buy crypto and gold.
US Empire now pays half a trillion dollars in interest payments per year to service its debt.
US debt increases by a trillion per year. It’s a death spiral that cannot be undone.
Self destruction and USD collapse are unavoidable. Get out of USD and US stocks. Buy gold & crypto.
— Kim Dotcom (@KimDotcom) October 25, 2018
Historical Background Of The US National Debt Situation
Kim specifically refers to the debt of the United States Government. Debt has risen sharply due to the deterioration in federal budgets. Between 1997 and 2001, the US national debt remained relatively stable at $ 5.5-5.8 trillion. The terrorist event of September 11, 2001 launched a global war on terror. As a result, US debt rose to $ 7 trillion at the beginning of 2004. The conflict in Iraq has become a "costly war". And to finance the war, US debt rose to $ 9 trillion in 2008.
Then, the Great Depression began in 2009. To this day, the United States has poured billions of dollars into helping banks and corporations. In early 2009, the national debt of the United States surpassed $ 11 trillion. Remarkably, this debt increase coincided with the birth of Bitcoin.
By 2012, US national debt has soared to $ 15 trillion. Debt growth has never slowed, reaching $ 20 trillion by the end of 2017. At that time, Bitcoin also hit a record $ 20,000. As of October 25, 1818, the national debt reached $ 21.7 trillion, or $ 1.25 trillion, a year and up $ 3.45 billion a day.
Actual US National Debt Combined With Kim Dotcom's Prediction
Bitcoin market capitalization is $ 112.5 billion (28/10), nothing compared with the US debt. The United States only took one month to increase its debt by an equal amount to the entire market capitalization of Bitcoin.
Below the US budget projections for 2019 are tables showing that the budget deficit will reach nearly $ 1 trillion by 2019. It is expected to continue to increase until 2028. Interest payments on US national debt will be $ 364 billion estimated, annual growth is $ 50 billion, generating $ 869 billion in debt repayments in 2028. These are estimates, not to mention emergencies such as major wars or severe economic collapse.
Combining this data with Kim Dotcom's statement, US national debt has plagued so much in the past two decades. The budget projection shows that the US is not able to reduce the deficit but can only start paying off debt. This would require the US to issue more bonds, so people would send money to the government and swap for some small long-term interest rates.
The Role Of Bonds In The Face Of US National Debt
Depending on the length of the bond period, the US Treasury bond yields range from 2.3% to 3.3%. Historical data on 10-year bond yields show that after a long period of decline, interest rates have risen from 1.5% (2016) to 3.2% (October 2018). Therefore, the amount of money spent on paying bond interest has risen more than 100% in the past two years. This may be because demand for bonds in the US fell against the amount of bonds they are trying to sell.
As bond interest rates rise, investors will be frightened, and the United States will have to print large-scale money to operate the country steadily. This will depreciate the US dollar, and perhaps the government is in the process. The dollar's inflation rate has been 53 percent since 1998, according to Consumer Price Index (CPI), which is about 2.7 percent of US $ inflation every year.
Conclusion
Increasing budget deficits led to an increase in bond yields. Raising interest rates led to mass printing as a last resort when demand for bond purchases disappeared. From that can cause high inflation of the dollar. This will be a disaster for many economies around the globe.
However, Bitcoin and gold should maintain their value relative to USD since the US can not print them.