Chamath Palihapitiya, a billionaire venture capitalist and entrepreneur warns against a recently passed law by Congress that could have long-term effects on the balance sheet of America.
The House of Representatives approved The One, Big, Beautiful Bill on May 22, which aims to boost America’s economy by permanently extending the Trump tax cut of 2017 and implementing other growth-oriented policies.
Palihapitya, in a recent episode of All-In Podcast lamented that the bill, passed at the last minute by Congress, runs contrary to meaningful reform and does not do much to curb the spiraling debt.
Palihapitiya claims that Congress rushed to negotiate the bill in order to pass it. As a result the bill shifted away from austerity, moving toward a “debt financed industrial policy”.
The 10-year yield [on Treasury bonds] today is about 4.5%. By the end of the year, at the current rate, the 10-year [Treasury yield] will be above 5%. Now, the 30-year rate is going to go past 6.25% and maybe even 6.5%. These rates are far above what many people believed was the reasonable level for the US economy.
What will be the consequences if rates reach those levels?
This cascade will be accelerated by ratings agencies who downgrade the United States. You will also see smart people start to indicate that the problem is more complex than initially believed. This is how I personally interpret Elon’s remarks over the past few days .”
Elon Musk, a billionaire who spoke over the weekend in the United States, said the country’s debt crisis is only going to worsen if it doesn’t exponentially increase its GDP.
“DOGE will continue to do its best work in order to delay the bankruptcy day for America. However, the government’s profligacy means only drastic improvements in productivity are able save the country.”
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As new information becomes available, this post Billionaire Chamath Palaihapitiya Sound Alarm on US Debt Crisis – Warns of Credit downgrade, Treasury Dumping Risk, and More could be updated.
