Silicon Valley investor Balaji Srinivasan has agreed with El Salvador President Nayib Bukele’s assertion that the U.S. government’s funding doesn’t stem from high taxes but rather from the Federal Reserve’s money printing. Srinivasan shared his agreement on X, the platform formerly known as Twitter, responding to Bukele’s speech at the Conservative Political Action Conference (CPAC) earlier this year.
Bukele, known for his bold economic policies, presented a stark view on the U.S. financial system. He argued that the high taxes levied on American citizens don’t directly fund the government. Instead, he explained that the U.S. government finances itself through Treasury bonds, which are essentially promissory notes. These bonds are primarily purchased by the Federal Reserve, which does so by printing more money. However, the backing for this printed money comes from the Treasury bonds themselves, creating a circular system.
Srinivasan’s endorsement of Bukele’s views comes amid a heated debate surrounding taxation policies in the U.S., particularly in the wake of Democratic presidential candidate Kamala Harris’ proposal for a 25% minimum tax on the unrealized gains of individuals with substantial wealth. This proposal has sparked backlash from Wall Street.
El Salvador, under Bukele’s leadership, has gained international attention for its pioneering embrace of Bitcoin. The country officially adopted Bitcoin as legal tender in 2021, making it the first in the world to do so. This move is part of a larger economic strategy to leverage Bitcoin’s potential for financial inclusion and economic growth.
The ongoing debate over U.S. government financing and the implications of money printing continues to be a hot topic, with individuals like Srinivasan adding their voices to the conversation. This discussion comes at a time when the U.S. is grappling with rising inflation and concerns about the long-term sustainability of its economic model.
