Do you remember the financial storm of '08? At that time, the two 'stewards' managing the U.S. Treasury—Paulson (during the Republican era) and Geithner (during the Democratic era)—recently sounded the alarm in front of the camera at the Aspen gathering: the towering mountain of U.S. national debt, now at $29 trillion, is starting to wobble!
Uncle Paulson bluntly stated: 'The government's borrowing speed cannot be stopped, it's like a one-way street. A crisis is bound to erupt, it's just a matter of time—could be six months from now, or it could be six years.' In other words, the national credit card is about to be maxed out.
Although Uncle Geithner believes that the current market still has some confidence in the United States (you see, borrowing costs haven't skyrocketed yet), he is more worried: the political deadlock in Washington is like a dark cloud hanging over the crucial 'lifeline'—such as controlling the deficit, maintaining the rule of law, and protecting the independence of the Federal Reserve (equivalent to the national central bank). These are the cornerstones of government bond credibility! When political turmoil erupts, the foundation becomes shaky.
The two of them rarely agree on criticizing the high tariff policies left by the Trump era. Paulson said this is like trying to prop up sunset industries while suppressing sunrise industries, distorting the market; Geithner was even harsher, directly calling it a 'toxic tax that corrodes American manufacturers'!
Although the U.S. economy is strong enough to withstand shocks, it is certainly self-inflicted trouble. Moreover, the revenue from tariffs makes politicians reluctant to let go of reforms, creating a vicious cycle.
Recently, there have been constant hints (implying the Trump faction) wanting to dictate to the Federal Reserve (the central bank) to lower interest rates. The two former stewards are anxious: the Federal Reserve must be independent! This is the core of confidence in the dollar and the cornerstone of the global financial system! Just think, if even the 'stabilizing force' can be swayed by politics, who would still dare to trust your bonds?
Think about it, if the market's confidence in U.S. Treasury bonds truly wavers, and everyone feels that this 'safest' asset is not so safe anymore, what will happen?
Capital always needs a place to stay, right? In panic, some funds seeking a 'safe haven' may start looking more seriously at gold or cryptocurrencies, especially those with limited supply, like 'digital gold'.
Although cryptocurrencies are currently very volatile and cannot replace the status of the dollar, concerns about the stability of the traditional financial system naturally add a touch of 'safe-haven' aura to alternative assets like cryptocurrencies. After all, when the foundations of the old world start to shake, some will want to test their footing in the new land.
So, the warnings from these two former stewards are not just Washington's worries. They quietly remind us: deep undercurrents are stirring in global finance, and every shake in confidence in the traditional system could inadvertently open a wider window for the crypto world. How will the future unfold? Keep your eyes wide open and continue to think!
