Galaxy Digital’s Mike Novogratz Warns of Looming US Debt Catastrophe

Galaxy Digital CEO Mike Novogratz has sent out a severe warning regarding the direction that US government spending is now taking. The billionaire brought attention to the concerning rise in government spending under both the administrations of former President Donald Trump and current President Joe Biden in a recent appearance on Bankless. He emphasized that the nation could become bankrupt as a result of this unsustainable expenditure.

Novogratz pointed out that the federal budget, as a percentage of GDP, is now at 26%, whereas it should be around 20%. This discrepancy translates to an additional $1.5 to $2 trillion more than what should be spent, creating a significant budget deficit. He explained, “What do you think the federal budget is this year as a percentage of GDP? It’s 26%. It’s supposed to be 20%. So 6%, it’s literally almost $1.5 trillion to $2 trillion more than they’re supposed to be able to spend and we’re not taxing enough. We’re taxing 20%. That leads to a 6% budget deficit. Who’s going to pay for that? Your grandkids or your kids…”

A Political Hot Potato

According to Novogratz, the only viable solution to address this deficit is to cut entitlements such as Medicare, Medicaid, and Social Security. However, he is skeptical that any politician will take on this challenge. “And so the only way to stop that is to cut entitlements. What are entitlements? Medicare, Medicaid, and Social Security. No politician wants to tell the old people, you don’t get the money you paid in for, you don’t get your hip replacement. We have the most inefficient medical system in the world. And those three things eat up almost all this money.”

Novogratz believes that the increasing debt and excessive government spending will drive investors towards Bitcoin as a hedge against dollar debasement. He stated, “So why I’m so optimistic Bitcoin is really unfortunate. I’d rather our government deal with the crappy finances so we don’t bankrupt our grandkids, because we will. We are bankrupting this country. Mark my freaking words. We don’t have the political will to do anything about it. The Democrats don’t. The Republicans don’t.”

At a time of fiscal uncertainty, Novogratz’s warning underscores the urgency for a sustainable financial strategy to prevent long-term economic damage.