The latest news is America Going Bankrupt ? and Elon Musk is trending yet again!
Elon Musk, the entrepreneur and brain behind SpaceX, Tesla and recently Twitter has said something crazy that Americans might focus on.
Elon Musk says ‘ America is going bankrupt’ as 76% of June’s tax receipts went to interest on debt. At first analysts, the world and all Americans thought ‘where did this come out of the blue?’ ‘ But is there some truth behind this allegation?
Well, it seems that there might be some truth to this and it’s something every trader and analyst needs to know.
So without further adieu, let’s dive into the source.
The Fed and the Income Tax – The Source:
The source for Elon Musk’s new revelation came from the article titled “Interest payment on US National debt will shatter $1,140,000,000,000 this year – eating almost 76% of All Income Taxes Collected.” and came on July 21st, 2024 on The Dialy Hodl.
The report noted that the vast majority of America’s income taxes are ready to be swallowed up just to pay interest on the country’s national debt.
Economist EJ Antoni reported that in the Fed’s June numbers, interest on the national debt is the equivalent of 76% of all the personal income taxes collected by the government.
In stern words he said
” Interest on the federal debt was equal to 76% of all personal income taxes collected in June and that is the Treasury’s largest source of revenue and three-quarters of it gets consumed just by interest”
He further went on to question the reliability of the congress by alleging the following:”
” Does Congress know? Do they even care? “
He further went on to say that the cost to service the federal debt has exploded 33% in a single year and it’s set to get even worse.
He also further reports that the interest on the national debt was and has been the single biggest expense for the government in June which far outruns other critical public services and the Treasury usually expects it will break the $1.14 trillion level this fiscal year.
The report ends by stating:
“The treasury now expects interest on the federal debt to break $1.14 trillion this fiscal year and if that estimate is anything like their usually overly optimistic projection, then be prepared for it to be much higher”.
The ‘Rising Debt of America” – A Deeper Dive into the Report:
The source of the report Mr Antoni, a research fellow in the Heritage Foundation’s Grover M Hermann Centre for the Federal Budget further dives into the latest monthly treasury statement from the Bureau of the Fiscal Service.
In his findings, he pointed out in detail that In June 2024, the US government spent $140.238 Billion on interest for Treasury debt securities. As this is June’s report, the government has collected $184.910 billion in individual income taxes that same month.
This means that an amount equivalent to 76% of June’s individual income tax revenue was used solely for interest payments on the national debt, not including principal repayment.
For several years including the wars, the campaign, politics and other factors, the reality of the matter is that the US has long shown that it’s a strong and expanding economy, however behind closed curtains, the National debt has also been rising at an alarming pace.
THe US federal government debt stood at $5.77 trillion at the start of 2000, and it has doubled to $12.77 trillion by the beginning of 2010 and has now escalated to $23.22 trillion at the start of 2020. The math just might blow your mind.
The most recent increase has been surprising with the national debt of the US reaching $34.94 trillion as per the latest figures from the Treasury department.
Mr. Antoni stating that he remains skeptical and suspect that the fiscal challenges could be even greater, remarking the following
” If that estimate is anything like their usual overly optimistic projections, then be prepared for it to be much higher.”
After Elon Musk’s tweet on the situation of America he follow up that response with another post asking ” Where as we with dollar value destruction, you might ask”
In response to this, veteran trader, know for his skills in the market Mr. Peter Brandt said the following
” The US Dollar is being destroyed. All paper currencies are being destroyed.”
He further says ” An entirely new system of payments and store of value will evolve during the next decade”.
He finally added a nod to the new nominee Ms. Kamala Harris stated ” Do you want Kamala Harris in charge of this because revolution in currency units will happen.”
A Perspective from Commodity Samachar:
Mr. Ankit Kapoor, the Head of Research at Commodity Samachar had this to say regarding the newest tweet by Elon Musk:
‘The reports have come in and there is some truth to this as well.
With the rising debt and spending such as this, there can be an impact on the market. However the US Treasury has an influx of funds and also several bonds and investment from China are also present as well.
If the US dollar meets its downfall then the economy can be affected in a very disastrous way. However with the elections around the corner, the US markets are in for a spike and as we all know in the election year the markets are always on the upward trend.
The only thing that can tackle this issue is the currency which will be launched by the BRICS but there is still no confirmation as to when this will be launched.
With regards to Elon Musk’s comment on America going into debt, the US will report to what it has always done i.e; elevating the debt ceiling.
That’s all for today folks!
Until next time,
Happy Trading!
Commodity Samachar
Learn and Trade with Ease
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