(Kitco News) – According to the St. Louis Federal Reserve, America’s debt-to-GDP ratio is 125 percent. Research by economists Ken Rogoff and Carmen Reinhart suggests that a debt-to-GDP ratio of over 90 percent causes lower economic growth and can trigger a public debt crisis.
Max Borders, CEO of Social Evolution, is concerned about more than. Speaking to Kitco News anchor and producer Michelle Makori, he said the US economy could experience a total “collapse” due to its unsustainable debt levels.
He said preppers, people who prepare for extreme collapse by stockpiling food, weapons and other essential supplies, are admirable.
“I’m starting to admire the preppers more and more, every day,” he told Makori at the FreedomFest 2022 conference in Las Vegas. “The only thing that I see that portends a terrible state of affairs is that the biggest economic power in the world is standing on debt [125 percent] of GDP.”
Riots in the streets
Citing recent events in Sri Lanka, where food and fuel shortages led to civil unrest, Borders said he foresees a similar fate for the United States
“That’s the kind of thing I worry about, and it doesn’t have to be the whole population,” he explained. “That may be a significant enough subset to make the matter very serious for all of us.”
Borders is skeptical about the ability of fiscal and monetary policy to solve problems, and says that the economy is a complex ecosystem. He compared economic policy to “[sticking] your hand into the Amazon rainforest or The Great Barrier Reef, and [trying to] run the complex systems … you cannot run, fix or design a complex system.”
He added that American citizens have come to expect handouts when the economy goes wrong, meaning the American debt burden is unlikely to be reduced.
He said, “austerity measures have worked, but what’s the political incentive? When everybody’s crying about gas prices, they want some kind of stimulus. They want something similar to what they got under COVID, and they’ve come to expect it. The political class is going to give it to them.”
Bitcoin as a solution?
After America’s collapse, Borders is optimistic that a better system will be built.
“We can reconstitute institutions that work better,” he said. “[Bitcoin] was a response to the problems of 2008 and 2009 which were sewn by the government and people who were excessively greedy… [Back then]we saw the use of the Bitcoin Whitepaper that Satoshi Nakomoto published.”
Because Bitcoin is decentralized, Borders argued that people can use it to “opt out” of the dollar, and “anything denominated in dollar assets.” He also called Bitcoin “the most sensible money in the world.”
“I’m not a Bitcoin maximalist … but I have a very strong understanding of Bitcoin,” he said. “Its soundness makes it the center of any good portfolio, but cryptocurrencies have other characteristics and they are continuously evolving in a more offensive ecosystem of value.”
To find out Border’s views on gold and the gold standard, watch the video above.
Follow Michelle Makori on Twitter: @MichelleMakori
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