Donald Trump, still the favourite to win the US presidential election in November, wants to create a national Bitcoin “stockpile.”
So does Senator Cynthia Lummis, a Republican from Montana: The Bitcoin Act, a bill she filed last week, would direct the Treasury to purchase 1 million Bitcoin, worth about $61 billion as of Friday.
For 20 years, that Bitcoin could be used for only one thing: paying off the country’s multi-trillion-dollar debt.
Still, even conservative-leaning economists seem to dislike the idea.
“Everything in it is just utter nonsense,” Jeffrey Miron, an economics professor at Harvard University and the director of economic studies at the libertarian think-tank Cato Institute, told DL News.
“It makes no economic sense in any way, shape, or form. It’s a completely crazy thing for the government to consider, and I hope that they never do it.”
Lummis’ office did not immediately respond to DL News’ request for comment.
A ‘Louisiana Purchase moment’
Lummis has repeatedly called the bill — officially named the Boosting Innovation, Technology and Competitiveness Through Optimised Investment Nationwide Act — “our Louisiana Purchase moment.”
The Bitcoin would be stored in a network of vaults featuring “the highest level of physical and cybersecurity,” according to a news release, and would be paid for by “diversifying existing funds within the Federal Reserve System and Treasury Department.”
“Becoming the first developed nation to use Bitcoin as a savings technology secures our position as a global leader in financial innovation,” Lummis said in the release.
The bill has thrilled Bitcoin’s most ardent proponents. At least one crypto lobbying firm has thrown its support behind the bill.
In a letter to Lummis’ Senate colleagues, Cody Carbone, chief policy officer at the Digital Chamber, said the bill “aligns with our national interests, demonstrates fiscal responsibility, and embraces technological advancements to alleviate economic burdens.”
Still, it has yet to pick up any additional support in the Senate.
Of the 30 bills Lummis has filed this session, the Bitcoin Act is one of only two without co-sponsors.
Miron likened the bill to President Joe Biden’s attempts to cancel student loan debt, which was effectively a transfer of money from taxpayers to people who went into debt to attend college.
“It’s just going to be a big, huge handout to the people who happen to own crypto at the time the government embarks on this,” Miron said, because it would probably boost the price of Bitcoin.
“An obvious interpretation of what the Trump campaign is doing is they’re trying to get a whole bunch of donations from crypto bros,” he added.
Patrick Horan, an economist at the libertarian Mercatus Center, agreed.
“This plan would likely benefit Bitcoin earners because the purchases would push up Bitcoin’s price,” he told DL News.
Volatile
“However, it’s not clear what the benefits are to every other US taxpayer. The price of Bitcoin is very volatile, so it could lead to either large profits or losses for the US government,” Horan concluded.
George Selgin, another Cato economist, said it would “reduce the Fed’s long-run capacity to remain self-financing.”
Oren Cass, chief economist at American Compass, a Republican-aligned think-tank that nevertheless supports targeted government intervention in the economy, appeared to lament the bill on social media.
“We have ceased to see the world in terms of real value for real people and now think merely about piles of financial assets,” he wrote about the bill on X.
To be sure, opposition from economists isn’t universal.
Writing in Bloomberg, Mercatus economist Tyler Cowen noted that several foreign governments have expressed interest in Bitcoin.
“The separation of government and crypto will eventually come to an end,” he wrote. “My only suggestion is that any change be made slowly, modestly and as far removed from politics as possible.”
Aleks Gilbert is DL News’ New York-based DeFi correspondent. You can contact him at aleks@dlnews.com.
