The U.S. has accumulated a huge pile of debt, and this has raised an alarm among economists and the American public alike. Tesla CEO Elon Musk on Friday suggested a quick fix for the problem.
What Happened: A X platform user shared the U.S. debt clock, which showed a staggering $34.65 trillion in outstanding dues owed by the U.S. government. “This can't be fixed. It's over,” the user captioned the post. Responding to the post, another user shared a reflective question: “Is there no turning back?”
Musk, who has previously commented on the precarious fiscal position of the U.S. joined in and said, “AI will solve this (slight chance of killing us).”
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Why It’s Important: The national debt is the accumulation of government’s borrowing along with associated interest it owed to the investors who purchased the securities it floated to raise finances.
Projections released by the Congressional Budget Office in February showed that the federal budget deficit will likely grow from $1.6 trillion in fiscal year 2024 to $2.6 trillion in 2034. As a percent of GDP, the deficit is expected to rise from 5.6% in 2024 to 6.1% in 2026. Debt held by the public will likely increase from 99% of GDP in 2024 to 116% in 2034, CBO said.
Mounting debt can soon diminish economic growth, restrict government spending on important programs, and raise the likelihood of financial crises, economists say.
Musk’s solution is aimed at boosting GDP growth, which in turn will likely provide the wherewithal to service debt and improve government’s tax receipts. Cathie Wood‘s Ark Invest sees disruptive innovation turbocharging real GDP growth from about 3% at an annual rate during the past 125 years to 6-8% during the next 15-20 years.
Wood has said in the past disruptive innovation such as Artificial General Intelligence (AGI) has the potential to boost productivity growth. In mid-May 2022, she said, “Within 6-12 years, breakthroughs in AGI could accelerate growth in GDP from 3-5% per year to 30-50% per year.”
Notwithstanding Musk’s confidence in AI, he continues to be cautious about the technology and has been asserting the need for regulating it. He was one of the co-founders of OpenAI, which set in motion the AI revolution through its hugely successful and widely-adopted ChatGPT large-language model.
The First Trust Nasdaq Artificial Intelligence and Robotics ETF ROBT last traded down 1.48% to $43.30, according to Benzinga Pro data.
Image generated using artificial intelligence via Midjourney.
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