A Strategy for Cryptocurrency

By Eileen Griffin-Ray

As America’s national debt soars, some are suggesting unusual solutions.  

The national debt is climbing as government spending continues, Fox New Business reports. Economists continue to warn that this level of spending is unsustainable. The White House and Congress are both to blame and neither political party has taken leadership in reigning in spending in recent years.

Interest on the debt now surpasses the cost of Medicare and the National Defense Budget. As interest payments become a larger line item on the budget, other services will suffer.

For at least the next thirty years, interest payments on the debt are expected to be the fastest growing line in the massive federal budget.

In 2023 Fitch Ratings downgrading the quality of American debt from AAA to AA+ in a surprising move.

“In making the decision, Fitch cited alarm over the country’s deteriorating finances and expressed concerns over the government’s ability to address the ballooning debt burden amid sharp political divisions,” Megen Henney and Eric Revelle wrote for FBN.

Outrageous levels of government spending have put the United States on a trajectory with potentially untenable consequences.

“Between 2020 and 2024, the United States has voluntarily encumbered itself with nearly $12 trillion in debt; debt that will at some point need to be repaid, defaulted upon, or subjected to some modification,” writes economist Peter C. Earle, Ph.D., for the American Institute for Economic Research

This year the federal government expects to have a $1.9 trillion deficit without any serious attempt to reduce that level.

Cryptocurrency is becoming an acceptable idea amongst some American politicians. President Donald Trump, has suggested the possibility of a Strategic Bitcoin Reserve, the American Institute for Economic Research reports. At the start of his second term, Trump indicated a favorable opinion of Bitcoin and currency technology.

The U.S. government already has over 200,000 bitcoins. Using the current holdings, the government could establish a bitcoin reserve. Former Presidential candidate, Robert F. Kennedy, has also expressed an interest in using bitcoins as a currency reserve.

In July of 2024, Wyoming Senator Cynthia Lummis introduced legislation to create a Strategic Bitcoin Reserve. She said the reserve would improve the finances of the United States.

“As families across Wyoming struggle to keep up with soaring inflation rates and our national debt reaches new and unprecedented heights, it is time for us to take bold steps to create a brighter future for generations to come by creating a strategic Bitcoin reserve,” Lummis said in a press release.

“Bitcoin is transforming not only our country but the world and becoming the first developed nation to use Bitcoin as a savings technology secures our position as a global leader in financial innovation. This is our Louisiana Purchase moment that will help us reach the next financial frontier.”

The proposal would entail moving U.S. dollars into bitcoins, which are expected to appreciate over time. The investment would require extensive taxpayer funds.

How a bitcoin reserve would actually work is unclear, the Wall Street Journal reports. The value is volatile, and the supply of bitcoin is limited.

George Selgin, a senior fellow at the Cato Institute’s Center for Monetary and Financial Alternatives told the WSJ that the value of a national bitcoin reserve for the United States is questionable since the U.S. doesn’t need a hedge against the dollar as other countries do.

“And unlike gold, which has long been seen as a haven asset around the world, bitcoin is still considered a speculative asset, Vicky Ge Huang writes for WSJ. “Given bitcoin’s notoriously volatile price, it isn’t clear whether stockpiling it would pay off over time.”

“Given that financial freedom was one of the motivations for a private digital currency such as bitcoin, it is incongruous to have the federal government acquire part of the stock of bitcoin. Indeed, such an acquisition can be considered partial nationalization,” writes Gerald Dwyer for AIER.

Originally published on NewsBreak

About the Author: Eileen Griffin-Ray, Ph.D., M.B.A., has many years of leadership experience in the financial services industry and has researched and written books and articles on politics, power, and leadership.