I'm pretty excited about the bitcoin prediction markets. It's a nice way to coordinate distributed knowledge about the future -- and have people put actual, real-world money behind their projections.
This one, though, seems outrageous: Will the U.S. National Debt Cross $40trn Before July 4th?.
It probably just opened and got seeded, which is why the odds are so stupid (even).
I pretty much see no way this is going to happen.
Some general observations:
- We're at $36trn today.
- Fiscal Year 2024 (year ended Sept 2024) deficits = $1.83 trillion
- U.S. nominal GDP about $29.1trn
- Last month the Treasury ran a $257bn deficit (Fiscal Data); these things come in unevenly but even if you extrapolate that over the next eight months (=2.056trn) you're still nowhere near the 40trn mark.
- if we take the highest single-month deficits in recent years ($380bn) and extrapolate that, we get about 3trillion -- again, roughly a trillion short.
- Fed is bringing BS down, not up, meaning the appetite for opportunistically issuing more Treasurys that the market could stomach is limited.
Looking at this in a different roundabout way:
- U.S. growth might be 2.5% next year (Goldman Sachs)
- U.S. deficit should be around 7.6% of GDP (Fitch)
- That gives us 29.1 x 1.025 x 0.076 =$2.27 trillion worth of deficits (for _the entire FY 2025, not just until July 4th).
If NGDP growth were 5%, pretty extraordinary as we're hinting at recession etc, and the deficit blew out to 10-15%, only then would we get close to the mark for the full Fiscal Year 2025.
Even with some Trump tax cuts early next year (which probs won't pass Congress etc., in time to do much) there's no way they're running 2-years plus worth of deficits in eight months. And the Elon-Vivek DOGE thing, if likely to do anything at all, is on cutting expenditures, thus operating against the debt blow out to 40trn.
While I don't particularly like locking up sats for this long a period (the election gamble where most of us made out like bandits was a good trial run, but also over a much short time horizon), this seems like a no-brainer.
Free sats on the table. Will I grab some?