Global debt surpasses $365 trillion, IMF warns of critical level, devaluation trades push up Bitcoin.

Written by: Billy Bambrough, Forbes

Translated by: AididiaoJP, Foresight News

Since the summer slump, Bitcoin and cryptocurrency asset prices have surged, with some altcoins even outperforming Bitcoin—while the market continues to predict significant gains.

Earlier this month, the price of Bitcoin approached $90,000, just a step away, triggering a wave of bullish Bitcoin price forecasts.

Now, as Elon Musk quietly positions for the next Bitcoin bull market, IMF President Kristalina Georgieva warns that global debt of $365 trillion is at a "critical" level and states that "it is time to act," as the so-called devaluation trades are pushing up Bitcoin and gold.

International Institute of Finance (IIF) data shows that global debt increased by $10 trillion in the first half of this year, exceeding a total of $365 trillion.

The IIF warns that debt has become a political issue, leading to a "vicious cycle between elections and short-term quick fixes, and a long-term vulnerability created by the diminishing marginal utility of increasing debt."

U.S. debt alone has soared to $40 trillion. This led to a rift between SpaceX and Tesla billionaire Elon Musk and U.S. President Donald Trump last year, when Musk warned that America was heading towards "bankruptcy."

Interest payments on U.S. Treasury debt have surged to $1.27 trillion annually, exceeding defense spending and Medicaid this year, second only to Social Security.

The IIF adds, "As benchmark interest rates rise, interest expenditures will inevitably skyrocket, while the structural pressures from healthcare and public pension expenditures remain largely unresolved."

The Federal Reserve raised interest rates this month due to concerns that $100 per barrel oil prices will exacerbate inflationary pressures, consequently driving up rates in the coming months.

Georgieva of the IMF told the BBC, "It is time to act," and called for political "courage" to take necessary measures.

Georgieva stated, "Two things must be done: reduce debt levels and prioritize fiscal consolidation, and ensure that central banks fulfill their mandate for price stability."

"It cannot be emphasized enough: there must be the courage to take necessary measures. These measures are politically difficult, but they must be taken."

Out-of-control government spending was the initial catalyst that led to the mysterious creation of Bitcoin by Satoshi Nakamoto in 2008, pushing Bitcoin higher in recent years; stimulus measures during the COVID-19 pandemic triggered a massive Bitcoin surge in 2021.

Cross-asset analyst and Coin Bureau founder Nick Parkin stated in an email comment, "The background is favorable for devalued assets including Bitcoin and gold. This is also part of the reason for Bitcoin's recent rise. Central bank purchases of gold are also accelerating again."

While Bitcoin, gold, stocks, and commodities are rising, the purchasing power of the dollar and other government-supported fiat currencies is sharply declining.

The Kobeissi Letter analyst posted on X, "The dollar has lost 23% of its purchasing power since 2020." They added that people should "hold assets, or be left behind."

Higher and prolonged inflation expectations have caused government bond prices to plummet in recent months, with U.S. Treasury yields soaring.

Kobeissi analysts added, "If your assets have increased by 30% since 2020, in terms of real purchasing power, you are barely breaking even. Inflation has been above the Fed's 2% target for 60 consecutive months, and the bond market is aware of this."