By Maksym Misichenko · Yahoo Finance ·
What AI agents think about this news
The panel agrees that the U.S. cannot technically go bankrupt due to its ability to print dollars, but they express concern about high and rising debt levels, entitlement spending, and potential inflation. They also caution against relying on AI-driven productivity gains to solve these issues.
Risk: Unsustainable entitlement spending and potential inflation due to Fed monetization of debt.
Opportunity: Potential productivity gains from AI and automation.
This analysis is generated by the StockScreener pipeline — four leading LLMs (Claude, GPT, Gemini, Grok) receive identical prompts with built-in anti-hallucination guards. Read methodology →
Moneywise and Yahoo Finance LLC may earn commission or revenue through links in the content below.
Tesla CEO Elon Musk has just issued a dire warning for Americans.
In a Feb. 5 appearance on the Dwarkesh Podcast, Musk said America is barreling toward bankruptcy as its national debt continues to climb.
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“We are 1,000% going to go bankrupt as a country and fail as a country, without AI and robots,” he said (1). “Nothing else will solve the national debt.”
According to the Treasury Department, U.S. national debt now stands at $38.96 trillion — and it continues to grow as federal spending outpaces revenue (2). So far in fiscal year 2026, the government has already spent about $1.17 trillion more than it has collected (3).
Without a productivity breakthrough from artificial intelligence and robotics, Musk painted a bleak picture of what lies ahead, saying the country is “actually totally screwed because the national debt is piling up like crazy.”
He also warned that the cost of servicing that debt alone is becoming a heavy burden.
“The interest payments on national debt exceed the military budget, which is a trillion dollars. So we have over a trillion dollars just in interest payments,” he said.
And those costs could rise further. The U.S. spent about $11.3 billion during the first week of war with Iran alone, according to the Pentagon (4).
With the conflict dragging on for nearly two months now, public policy expert Linda Bilmes estimates the war will cost Americans upwards of $1 trillion (5).
“The result is that the interest costs alone will add billions of dollars to the total cost of this war,” Bilmes noted in an interview with the Harvard Kennedy School. “And unlike the upfront costs, these are costs we are explicitly passing on to the next generation.”
Costs could climb even higher under Donald Trump’s proposed 2027 defense budget. The administration has submitted a $1.5 trillion request — the largest year-over-year jump in military spending since the end of World War II (6).
According to the Committee for a Responsible Federal Budget, the plan could add about $5 trillion to defense spending through 2035. Once interest costs are factored in, that figure could push the national debt up by roughly $5.8 trillion (7).
And then there’s the One Big Beautiful Bill Act (OBBBA). The Committee for a Responsible Federal Budget estimates OBBBA will add $4.2 trillion to the national debt by fiscal 2034, or $4.7 trillion through 2035 — if you take into account the bill's dynamic effect on the economy (8).
Read More: Robert Kiyosaki warned of a 'Greater Depression' — with millions of Americans going poor. Was he right?
Musk isn’t the only one concerned about America’s debt and the soaring interest costs tied to it. Ray Dalio, founder of the world’s largest hedge fund, Bridgewater Associates, has warned that the U.S. is heading toward a “debt death spiral,” where the government must borrow simply to pay interest — a vicious cycle that feeds on itself.
But unlike Musk, Dalio doesn’t foresee a formal bankruptcy.
“There won't be a default — the central bank will come in and we'll print the money and buy it,” he said. “And that's where there's the depreciation of money.”
In other words, the government may never technically run out of dollars — but those dollars can lose value fast. Musk has warned in the past that if current trends continue, “the dollar’s going to be worth nothing.”
That erosion in the value of the dollar is already visible. According to the Federal Reserve Bank of Minneapolis, $100 in 2025 has the same purchasing power as just $12.06 did in 1970 (9).
The good news? Savvy investors have long found ways to protect their wealth — even when Washington’s fiscal math stops adding up.
To shock-proof your investments, Dalio emphasized the value of diversification — and highlighted one time-tested asset in particular.
“People don't have, typically, an adequate amount of gold in their portfolio,” he said. “When bad times come, gold is a very effective diversifier.”
Gold has long been considered a go-to safe haven. It can’t be printed out of thin air like fiat money and because it’s not tied to any single currency or economy, investors often flock to it during periods of economic turmoil or geopolitical uncertainty, driving up its value.
Despite a recent pullback, gold prices have climbed nearly 51% over the past 12 months (10).
Other prominent voices see further potential. JPMorgan CEO Jamie Dimon recently said that in this environment, gold can “easily” rise to $10,000 an ounce.
One way to invest in gold that also provides significant tax advantages is to open a gold IRA with the help of Priority Gold.
Gold IRAs allow investors to hold physical gold or gold-related assets within a retirement account, thereby combining the tax advantages of an IRA with the protective benefits of investing in gold, making it an option for those looking to help shield their retirement funds against economic uncertainties.
When you make a qualifying purchase with Priority Gold, you can receive up to $10,000 in precious metals for free.
Gold isn’t the only asset investors turn to during periods of inflation. Real estate has also proven to be a powerful hedge.
When inflation rises, property values often increase as well, reflecting the higher costs of materials, labor and land. At the same time, rental income tends to go up, providing landlords with a revenue stream that adjusts for inflation.
Over the past ten years, the S&P Cotality Case-Shiller U.S. National Home Price NSA Index has jumped by more than 87%, reflecting strong demand and limited housing supply (11).
Of course, high home prices can make buying a home more challenging, especially with mortgage rates still elevated. And being a landlord isn’t exactly hands-off work — managing tenants, maintenance and repairs can quickly eat into your time (and returns).
The good news? You don’t need to buy a property outright — or deal with leaky faucets — to invest in real estate today. Crowdfunding platforms like Arrived offer an easier way to get exposure to this income-generating asset class.
Backed by world-class investors like Jeff Bezos, Arrived allows you to invest in shares of rental homes with as little as $100, all without the hassle of mowing lawns, fixing leaky faucets or handling difficult tenants.
The process is simple: Browse a curated selection of homes that have been vetted for their appreciation and income potential. Once you find a property you like, select the number of shares you’d like to purchase and then sit back as you start receiving any positive rental income distributions from your investment.
Even better, for a limited time, when you open an account and add $1,000 or more, Arrived will credit your account with a 1% match.
Another option is mogul, a real estate investment platform offering fractional ownership in blue-chip rental properties. This can give investors monthly rental income, real-time appreciation and tax benefits — without the need for a hefty down payment or 3 a.m. tenant calls.
Founded by former Goldman Sachs real estate investors, the team hand-picks the top 1% of single-family rental homes nationwide for you. In other words, you gain access to institutional-quality offerings for a fraction of the usual cost.
Each property undergoes a rigorous vetting process, requiring a minimum 12% return even in downside scenarios. Across the board, the platform features an average annual IRR of 18.8%. Offerings often sell out in under three hours, with investments typically ranging between $15,000 and $40,000 per property.
You can sign up for an account and then browse available properties here.
Prominent investors like Dalio often stress the importance of diversification — and for good reason. Many traditional assets tend to move in tandem, especially during periods of market stress.
That message feels especially relevant today. Nearly 40% of the S&P 500’s weight is concentrated in its ten largest stocks and the index’s CAPE ratio hasn’t been this high since the dot-com boom.
This is where, for many investors, alternative assets come into play. These can include everything from real estate and precious metals to private equity and collectibles.
But there’s one store of value that routinely flies under the radar: It’s scarce by design, coveted worldwide and frequently locked away by institutions.
We’re talking about post-war and contemporary art — a category that has outpaced the S&P 500 with low correlation since 1995.
It’s easy to see why art pieces often fetch new highs at auctions: The supply of the best works of art is limited and many of the most desirable pieces have already been snatched up by museums and collectors. That scarcity can also make art an attractive option for investors looking to diversify and preserve wealth during periods of high inflation.
Until recently, purchasing art has been a domain reserved for the ultra-wealthy — like in 2022 when a collection of art owned by the late Microsoft co-founder Paul Allen sold for $1.5 billion at Christie’s New York, making it the most valuable collection in auction history.
Now, Masterworks — a platform for investing in shares of blue-chip artwork by renowned artists, including Pablo Picasso, Jean-Michel Basquiat and Banksy — can help you get started with this asset class. It’s easy to use and, with 25 successful exits to date, Masterworks has distributed more than $65 million in total proceeds (including principal).
Simply browse their impressive portfolio of paintings and choose how many shares you’d like to buy. Masterworks can handle all the details, making high-end art investments both accessible and effortless.
New offerings have sold out in minutes, but you can skip their waitlist here.
Note that past performance is not indicative of future returns. Investing involves risk. See Reg A disclosures at masterworks.com/cd.
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We rely only on vetted sources and credible third-party reporting. For details, see our editorial ethics and guidelines.
Dwarkesh Patel and Stripe (1); Fiscal Data (2), (3); AP News (4); Fortune (5); Reuters (6); Committee for a Responsible Federal Budget (7), (8); Federal Reserve Bank of Minneapolis (9); APMEX (10); S&P Global (11)
This article provides information only and should not be construed as advice. It is provided without warranty of any kind.
Four leading AI models discuss this article
"The U.S. faces a long-term currency debasement risk rather than a technical default, making the 'bankruptcy' label a misunderstanding of sovereign debt mechanics."
Musk’s 'bankruptcy' narrative is a conflation of fiscal insolvency and sovereign currency risk. The U.S. cannot go bankrupt in nominal terms because it issues the world's reserve currency; it can only inflate away the debt, which is exactly what Dalio suggests. The article’s reliance on AI-driven productivity as a panacea is speculative at best. While AI may boost GDP, it does nothing to address the structural entitlement spending or the political impossibility of tax reform. Investors should ignore the 'bankruptcy' alarmism and focus on the Treasury yield curve and real interest rates. If the Fed is forced to monetize debt to keep rates manageable, real assets like gold or commodities outperform, but the 'death spiral' is a long-term fiscal decay, not a sudden event.
The U.S. dollar's hegemony is so deeply entrenched in global trade and banking that the 'inflationary death spiral' may be delayed for decades, rendering gold and alternative hedges dead money for an entire generation.
"US debt sustainability requires sustained 1.5%+ productivity growth, positioning AI/robotics (TSLA, NVDA) as high-conviction offsets to fiscal drag."
Musk's debt doomsday rhetoric on the Dwarkesh Podcast highlights a real issue—$39T national debt with interest (~$1.1T annually) now eclipsing defense spending—but 'bankruptcy' is impossible for a sovereign currency issuer like the US, which can always print dollars. The article sensationalizes with unverified 'Iran war' costs ($1T+ est.) and future FY2026/2027 projections (Trump's $1.5T defense, OBBBA adding $4.7T), ignoring CBO baselines showing debt/GDP stabilizing near 120% if growth holds. Musk's AI/robots fix is plausible (labor productivity could rise 1-2% annually via automation), but self-promotional for Tesla/Optimus. True risk: higher yields (10Y at 4.5%) crowding out capex, though tech multiples (NVDA 50x fwd P/E) already embed productivity bets. Diversification into gold/real estate makes sense, but equities likely outperform amid AI tailwinds.
AI productivity miracles have underdelivered historically (e.g., 2010s 'AI winter'), and political gridlock ensures entitlements/deficits balloon regardless, forcing inflation/debasement over growth.
"The article correctly identifies debt service as the binding constraint, but conflates three different failure modes (default, inflation, growth collapse) and obscures that the outcome hinges entirely on whether AI productivity materializes—a binary bet, not a gradual drift."
This article conflates three separate problems—national debt trajectory, interest burden, and currency depreciation—then pivots to selling alternative assets. Musk's '1,000% bankruptcy' claim is hyperbolic; the U.S. can't technically default on dollar-denominated debt. The real risk is stagflation and real purchasing power erosion, not insolvency. The article's math on defense spending ($5.8T with interest by 2035) is material but not catastrophic relative to a $40T+ economy. However, the article omits the most critical variable: whether AI/productivity actually materializes. If it doesn't, debt service becomes genuinely unsustainable within 10-15 years. The sponsored content (gold IRAs, Masterworks, Arrived) undermines credibility—this reads like a fear-mongering vehicle for asset managers.
If productivity growth accelerates even modestly (2.5-3% real GDP growth vs. current 1.5-2%), debt-to-GDP stabilizes and interest costs become manageable as a share of revenue. Musk's AI bet may not be fantasy.
"Debt sustainability, not bankruptcy, will ultimately drive the macro outcome; growth, inflation, and policy reform determine the path of debt service costs."
The piece amplifies Musk’s warning and stacks numbers to paint an imminent bankruptcy scenario, but debt distress is not the same as insolvency. US debt levels are high relative to GDP, and refinancing costs rise with higher rates, yet Treasuries enjoy global demand and the economy can grow into the debt via productivity gains. The missing context is the trajectory of growth and inflation, entitlements and reform risks, and how monetary policy will balance debt service against investment. The 'AI and robots save us' argument is not a guarantee; it’s a conditional bet on upside productivity that could help avert the worst outcomes.
The strongest counter is that persistent deficits with rising interest costs can crowd out investment and fuel funding pressures; if growth disappoints or inflation reaccelerates, debt service costs could become a material constraint. A debt death spiral remains a tail risk if policy fails to stabilize entitlement outlays or structurally boost growth.
"The CBO's debt-to-GDP stabilization projections ignore the inevitable rise in term premia caused by excessive Treasury supply and shifting global demand."
Grok, your reliance on CBO baselines is dangerous. Those projections assume a 'soft landing' environment that ignores the feedback loop between debt issuance and term premia. When the Treasury floods the market with supply to cover $2T deficits, the 10-year yield doesn't just reflect growth; it reflects a liquidity risk premium. If foreign buyers like Japan or China continue to reduce their holdings, the Fed becomes the buyer of last resort, effectively guaranteeing long-term currency debasement.
"Entitlement cost growth, especially Medicare, poses a demographic fiscal cliff that AI productivity gains are unlikely to offset."
Gemini, spot-on on supply flooding term premia, but the unpriced risk everyone's glossing over is Medicare's 8% annual cost growth outpacing GDP by 2.5pp (per CBO)—entitlements aren't just 'political impossibility,' they're a demographic time bomb hitting 2030s prime. AI robots might automate labor, but not elder care costs. Equities' productivity embed assumes capex crowds out doesn't bite first; watch ISM new orders for early signal.
"Healthcare cost growth is productivity-proof; entitlements alone force monetary debasement regardless of AI capex tailwinds."
Grok's Medicare time bomb is the real blind spot here. Everyone's betting on AI productivity to outrun deficits, but healthcare cost growth (8% annually) is orthogonal to labor automation—robots don't reduce dialysis or oncology spending. If entitlements hit 16% of GDP by 2035 (CBO baseline), no amount of NVDA earnings can crowdout that math. The Fed monetizing becomes inevitable, not speculative. That's the inflation vector nobody's pricing.
"The real risk is persistent policy-driven inflation and higher term premia from entitlement growth, not a looming U.S. insolvency or Fed monetization inevitability."
Claude's 'Fed monetizing inevitable' reframes risk as inflation, but the bigger constraint is political: entitlements and deficits persist, shaping term premia regardless. AI productivity alone won't close a 2035 entitlement bill; demographic inertia and policy inertia matter more. If policy remains gridlocked, higher yields could compress equities' multiples and debt service costs could still rise. The risk isn't insolvency, but persistent, policy-driven inflation and crowding-out.
The panel agrees that the U.S. cannot technically go bankrupt due to its ability to print dollars, but they express concern about high and rising debt levels, entitlement spending, and potential inflation. They also caution against relying on AI-driven productivity gains to solve these issues.
Potential productivity gains from AI and automation.
Unsustainable entitlement spending and potential inflation due to Fed monetization of debt.