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Increase in world debt equals 71 times BTC’s market capitalization

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The nations of the world have borrowed more than ever in recent years. In contrast, BTC’s market capitalization looks tiny.

Since the first quarter of 2017, the world’s debt has exploded from $ 225.2 trillion to $ 296 trillion in the second quarter of 2021. The increase is $ 70.5 trillion – the equivalent of 71.3 times that BTC’s market cap (based on a market cap of $ 988 billion on October 6th).

So, in just four years, the world has added over 71 times the market capitalization of BTC in the form of debt. The corona crisis in particular has pushed many large economies to pump massive amounts of money into the markets.

Increase in world debt equals 71 times BTC's market capitalization
World debts since 2017 (Source: Bloomberg).

The issue of debt is more topical than ever. Because the media around the world have been reporting for weeks about the possible global consequences of a bankruptcy of the real estate giant Evergrande, which has amassed a mountain of debt amounting to 300 billion US dollars. In addition to the heavily indebted construction company from China, one topic in particular was explosive: the possible shutdown in the USA. This was initially averted by an agreement by the US Senate. Is it therefore appropriate to give the all-clear? No. Because a far more sensitive point is still open: the increase in the statutory debt ceiling.

Janet Yellen, Treasury Secretary of the United States of America, has been speaking out for weeks warningly that if the current debt ceiling of 28.4 trillion US dollars is not raised, the US will face an unprecedented crisis. Ultimately, based on historical Senate decisions, the debt ceiling is likely to be raised. But this only treats the symptoms of the debt problem; the causes remain deeply anchored in the global economy.

One country in particular was responsible for a large part of the debt taken on: the USA. No other country in the world has so much debt accumulated in recent years. Especially during the term of office of the controversial ex-President Donald Trump, from 2017 to 2021, an unprecedented amount of debt was taken on.

During Trump’s tenure: $ 7.8 trillion in new debt

During Trump’s tenure, there was a total of $ 7.8 trillion in US national debt recorded – about 7.9 times the total market capitalization of BTC.

Donald Trump planned to achieve the opposite during his tenure, namely the reduction of all US national debt. That comes from a 2016 interview with the Washington Post. Back then expressed Trump is extremely confident that he will be able to repay the national debt in just eight years. The graph above shows the opposite, however: debt exploded during his tenure.

Increase in world debt equals 71 times BTC's market capitalization

 

In comparison, the BTC market capitalization (source: CoinMarketCap).

BTC versus US student loans

Not only BTC celebrated the milestone in 2021, the cracked US $ 1 trillion market capitalization. The total of all US credit card debt is currently around USD 1 trillion.

Increase in world debt equals 71 times BTC's market capitalization

 

National student loan since 2003 (source: Educationdata.org).

In addition to US credit card debt, another mountain of US debt is symptomatic of the state of the US: student loans. The total of all national student loans in the US stood at a staggering $ 1.767 trillion on October 2, 2021, far more than BTC’s market cap and almost as much as the entire crypto market.

By comparison, in 2003, less than twenty years earlier, US national student loans were just $ 330 billion. In 2013 they had already risen to just under $ 1 trillion – a 300 percent increase in just 10 years. And if this growth continues, student loans in the United States should soon break the $ 2 trillion mark. The national debt of Germany also shows how high the total amount of loans is. Because this fraud on June 29 and according to dates from Destatis $ 2.61 trillion (or 2.251 trillion euros).

It should be noted: The mountain of debt in the world has never been higher and is many times larger than the market capitalization of BTC. Overcoming the debt problem is likely to be one of the greatest obstacles for the nations of the world in the next few years. If the states fail to get a grip on the problem, the debt bubble threatens to burst.

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