Former Coinbase CTO: 10 Charts to Understand the Current State of the U.S. Economy, With No Choice But the Money Printer

Author: Balaji Srinivasan, former CTO of Coinbase

Compiled by: 0xjs, Jinse Finance

No election can repay America's $175 trillion debt. Only the money printer can.

Because, as Musk, Dalio, and others have realized… the Western world is heading towards a sovereign debt crisis more severe than in 2008. Just as they have been lying about Biden's dementia, they are also lying about the state of the economy. So they will print a lot of money.

Look at the data, and you can judge for yourself.

1. Emergency Loans Exceed 2008 Levels

First, did you know that the Federal Reserve issued more emergency loans in 2023 than during the 2008 financial crisis? The U.S. government first sold billions of dollars in bonds to financial institutions and then devalued them through unexpected interest rate hikes, keeping the banking system alive.

You can see it in this chart from the Federal Reserve. The blue spike in the lower left represents loans during the 2008 crisis. The purple is for COVID. The giant orange/blue-green monster on the right represents the 2023 banking crisis. Just look at how much higher it is than in 2008?

2. Borrowing Exceeds COVID Levels

Second, did you know that during the "Biden Boom," the amount borrowed by the U.S. was greater than during the COVID pandemic? Regardless of whether COVID should be considered a financial crisis, at least the borrowing rate during COVID was about 0%. But now, the U.S. government is borrowing historically massive amounts of money in peacetime… with interest rates as high as 5%! This is the act of a desperate person maxing out their credit card.

3. Interest Payments Exceed Defense Spending

Third, did you know that all this borrowing has made interest payments on the national debt the largest single expenditure of the government? Exceeding defense, Social Security, or any other spending. As of 2024, the primary use of all tax revenue (and printed dollars) is to pay bondholders. Even so, anyone who has bought U.S. Treasury bonds (or other bonds) in recent years is quickly disappearing. For all wars and all welfare, it's pay first, buy later. The chart shows that the time for payment has come.

4. Dollar Further Devalued

Fourth, did you know that the dollar has devalued by at least 25% in just four years? You might know this from your own experience with inflation. But Larry Summers estimates that the decline in purchasing power is even greater, and when accounting for the significant increase in loan repayments due to rising interest rates, the annual figure could reach 18%. In four years, this devaluation figure will far exceed 25% of the dollar's value.

5. China Further Sells U.S. Treasuries

Next, did you know that China (the largest foreign buyer of U.S. Treasuries) has been accelerating its sale of U.S. debt? This is somewhat technical, but China is an "external investor" in the U.S., just like a new venture capitalist investing in your tech company is an external investor. Even if they only buy 5% of your equity (or in this case, debt), they set the price for everyone else. And it indicates strong external demand, which comes from those who do not have to buy. But now external demand is collapsing:

6. BRICS Countries Buying More Gold

But isn't the dollar a store of value? If they are not buying U.S. Treasuries, what are other countries buying? China is leading most countries outside the U.S. These countries have begun to hoard historic amounts of gold, while Western countries have been selling gold. Take a look:

7. De-dollarization More Than Ever

Well, what about the dollar as a medium of exchange? Well, China—if you didn't know, it is currently the number one trading partner for most countries in the world—has just shifted to conducting cross-border foreign exchange transactions in renminbi.

8. Sanctions Less Effective Than Ever

Well, but can't the dollar continue to be used as a weapon of sanctions? Don't countries need to enter the U.S. financial system? In fact, they do not. All sanctions against Russia have actually harmed Europe more than they have harmed Russia. Europe needs Russian oil and gas, but Russia has other customers. Therefore, according to the World Bank (not a Russian source!), Russia has just surpassed Japan to become the fourth-largest economy in the world by GDP based on purchasing power parity.

9. Peacetime Debt Approaching WWII Levels

But what about the U.S. military? Can't it ultimately wage war to protect the dollar? This is a long topic, but take a look at the chart below. Today, the U.S. is ostensibly in "peacetime." But its debt is comparable to that during World War II:

Similarly, this is another topic, but the U.S. has neither the funding nor the manufacturing base to sustain military operations against an adversary like China. You cannot fight with your factories—especially when you are out of money.

10. Real Debt Exceeds Any Empire in History

Finally, perhaps the most important number in the entire discussion is $175.3 trillion. When you consider all benefits like Social Security and Medicare, this is actually America's real debt. And this number is also rising rapidly. Don't take my word for it; trust the U.S. government's financial report from February 2024:

$175.3 trillion aligns with the roughly $200 trillion figure that Druckenmiller has been using, which accounts for all factors representing the total liabilities of the U.S. government. Of course, we are currently in a monopoly currency realm because:

a) The entire federal government only brought in about $2 trillion last year.

b) This number is itself affected by deficit spending.

c) Since 2020, the dollar has actually fallen by about 25%.

d) If liquidated, the "177 trillion" in asset values would plummet.

e) …or if a financial crisis occurs, or both,

then the $175 trillion debt is unpayable. The U.S. government has almost no money to repay the debts owed. It has made commitments to everyone (from allies to retirees) that it simply cannot fulfill. Continuing to govern in such dereliction will become very bad, and most people cannot truly comprehend it.

The Dollar is Becoming Less Important

In short: I haven't even started. I can show more charts and more videos from investors in bonds, real estate, and technology from around the world who see what is happening.

But if you are honest, the status of the dollar is rapidly declining. It is no longer the indispensable asset it once was. To summarize:

a) China does not need the dollar to trade; they use renminbi instead of dollars.

b) BRICS countries do not need the dollar to save; they buy gold instead of U.S. bonds.

c) Russia does not need the dollar to survive; it is the fourth-largest economy excluded from the U.S. economy.

d) However, the U.S. needs as many countries as possible to accept the dollar because its borrowing levels have surpassed those of the COVID pandemic, World War II, and any empire in history.

So, what will happen next? I have some ideas, but first, we need to agree on what is happening.