Billionaire Chamath Palihapitiya Sounds Alarm on US Debt Crisis, Warns of Credit Downgrade, Treasury-Dumping Risk and More

Billionaire venture capitalist Chamath Palihapitiya warns that a newly passed bill by Congress could deal long-term damage to America’s balance sheet.

On May 22nd, the House of Representatives greenlit The One, Big, Beautiful Bill, which is designed to fuel America’s economic growth by making the 2017 Trump tax cuts permanent in addition to other pro-growth policies.

In a new episode of the All-In Podcast, Palihapitya laments that the last-minute bill passed by Congress runs counter to meaningful reform, and does little to rein in the country’s accelerating debt spiral.

Palihapitiya says Congress did some rushed bargaining to get the bill through, and as a result, the bill moved away from austerity and toward “debt-financed industrial policy.”

“That lack of discipline is going to create, I think, a negative set of consequences…

Today, I think the 10-year [Treasury yield] is around 4.5%. At the rate at which it’s escalating since Liberation Day, by the end of this year, we’re going to be past 5%. The 30-year is on a rate now to get past 6.25%, maybe even reach 6.5%. Those are way beyond what most people thought was a reasonable place to be for the United States economy.

So what will the implications be as rates go to those levels? 

You’ll de-lever from the United States, you’ll sell US debt, you’ll own things like gold and Bitcoin… You’ll have ratings organizations that add to this cascade by downgrading the United States… You’ll have very smart people starting to signal that this is a much harder problem than they initially thought. That’s how I personally interpreted Elon’s comments over the last few days.”

Over the weekend, billionaire Elon Musk said that the only way for the United States to get out of its rapidly expanding debt problem is to exponentially grow its GDP.

“I have come to the perhaps obvious conclusion that accelerating GDP growth is essential.

DOGE has and will do great work to postpone the day of bankruptcy of America, but the profligacy of government means that only radical improvements in productivity can save our country.”

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