Dear Reader,
Explains Forbes:
- The United States is facing a fiscal crisis of historic proportions. Ballooning deficits, runaway debt service costs, and the risk of a bond market meltdown are pushing the nation toward uncharted territory. Traditional solutions, whether austerity, tax hikes, or controlled inflation, are inadequate.
Traditional solutions are indeed inadequate. Yet does there exist a nontraditional solution — in part at least?
Perhaps a nontraditional solution does exist… in part at least. President-elect Trump himself has even blessed it with an approving wink.
What is this nontraditional solution? Answer shortly. Yet first…
The Doomsday Feedback Loop
Forbes continues:
- Rising interest rates could lead to a debt spiral in Trump’s second term. Higher borrowing costs would beget more borrowing, which would fuel yet higher costs. This would apply inflationary pressure to the dollar that would be difficult to counteract…
- This feedback loop is hard to escape in the fiat system. Tax hikes slow growth, spending cuts invite backlash, and inflation — though politically expedient in the short term — would destroy the purchasing power of the voting public.
- The result is a dollar teetering on collapse…
A gorgeous conundrum! Yet again: Does a nontraditional solution exist?
You may fall from your chair at the very thought of it.
You may chuckle at it, scoff at it, sneer at it, deride it.
Yet here is the proposed solution: The establishment of a Bitcoin Reserve.
Maybe Bitcoin’s Not so Bad
Once again, Forbes:
- For over a decade, the U.S. government has battled bitcoin…
- However, in 2024, the tune suddenly changed. The ultimate Big Finance insider, BlackRock, began selling and promoting bitcoin. Pension funds, family offices, and individual investors now have easy access to bitcoin exposure, with no need of technical knowledge.
- Now that capital markets are open to large-scale adoption of bitcoin, the U.S. is free to pivot to endorse it as a reserve asset.
Towards Fiscal Eden
More:
- If the Strategic Bitcoin Reserve comes to fruition and the U.S. Department of the Treasury begins purchasing and holding bitcoin, other nations would need to compete by doing the same.
- Some would sell assets — including U.S. Treasury bonds. Others would print their currencies to purchase it. The result would be further acceleration of capital exiting the fiat system and entering the bitcoin ledger.
Fiscal Eden is where the plan takes us:
- Suppose the U.S. Treasury acquires significant bitcoin reserves while simultaneously allowing the dollar to slide into oblivion. As bitcoin appreciates — potentially into multi-million-dollar territory — it could offset the national debt in nominal terms.
- A hyperinflating dollar paired with appreciating bitcoin reserves would invert the current debt dynamic, allowing liabilities to shrink relative to assets.
That’s a Lot of Bitcoin!
Bitcoin presently trades in the $100,000 vicinity.
The United States government holds in its possession some 208,109 Bitcoin… worth approximately $21 billion.
The United States government holds $21 of Bitcoin primarily due to seizure of criminal assets of that amount.
Yet: At the going rate the United States government would need purchase a near infinity of Bitcoin to scotch the national debt.
Yet Wyoming Senator Cynthia Lummis — a Bitcoin drummer — says we need not banish the national debt at a stroke.
She instead proposes the gradualist approach…
The BITCOIN Act
Wyoming’s junior senator proposes the “Boosting Innovation, Technology, and Competitiveness through Optimized Investment Nationwide Act of 2024.”
Do you get it? The BITCOIN Act!
The bill would transfer all seized Bitcoin to a Strategic Bitcoin Reserve.
The United States Treasury would also purchase up to 200,000 Bitcoin each year for — five years.
“If we did that with 5% of all the Bitcoin that ever exists,” claims Wyoming’s junior senator, Lummis, “we could cut our debt in half in 20 years.”
Funding the BITCOIN Act
A halving of United States debt in 20 years is plenty handsome. Not entirely handsome — a fully handsome proposal would take it further down.
Yet I concede it is handsome.
How would the business be funded? Explains MSN:
- How would this be funded? The plan involves reshuffling federal assets, including slashing Federal Reserve bank capital from $6.8 billion to $2.4 billion and redirecting $6 billion in seigniorage profits. Another bold move: revaluing U.S. gold reserves.
- Right now, the Treasury values its gold at $42.22 per ounce, for a total of $11 billion. At market rates, that gold is worth over $650 billion. If the Treasury forced the Federal Reserve to revalue the gold and hand over the difference—around $640 billion—the government could funnel that money into Bitcoin.
- The potential impact of a $640 billion Bitcoin-buying spree? Insane price surges. Crypto markets would go haywire, and the fallout would ripple across global finance.
Just so. Yet what are the odds that President Trump will establish a Strategic Bitcoin Reserve?
Betting platform Polymarket gives the fellow a 33% odds of establishing one by April 2025.
I’m Not Holding My Breath
Do I believe President Trump will establish a Strategic Bitcoin Reserve? I am far from convinced.
Do I believe President Trump should establish a Strategic Bitcoin Reserve? I am cut in half.
I am heart and soul for any proposal that hacks the nation’s debt.
Yet here is a question: Is it wise to base your debt retirement plan on a schizophrenic asset?
Bitcoin has recorded plummets of 50%… 53%… 56%… 83%… 84%… and 99%.
Mass government purchases would afford Bitcoin a much firmer mental stability, I concede it.
The proposal is nonetheless chained to risk, given its history — likely, loads of it.
Wait a Second…
Yet what is this? Let us revisit Forbes:
- If bitcoin were to become a global reserve asset, it would kick off a new era of fiscal discipline.
- Unlike fiat, bitcoin’s fixed supply imposes natural constraints on government spending, forcing policymakers to operate within the bounds of solvency. Reckless deficit spending, forever wars, and currency debasement would become relics of the fiat past…
- Freed from the distortions of fiat monetary policy, markets could allocate capital efficiently, fostering an explosion of productive growth.
A new era of fiscal discipline? Reckless deficit spending, forever wars, and currency debasement would become relics of the fiat past?
The Bitcoin alternative begins to seduce me.
Upon further reflection I am seduced — the intoxicating Kool Aid is down the gullet.
Three huzzahs for the Strategic Bitcoin Reserve.
No. Four huzzahs, five huzzahs, six huzzahs— 36 trillion huzzahs!
I nominate President Trump for Dictator instantly upon its establishment.
Regards,
Brian Maher
for Freedom Financial News
P.S. It happened in 2000… it happened in 2008… it happened in 2021… and now…
It looks like it’s happening again? What am I talking about?
A tech apocalypse.
The great NVIDIA collapse of 2024 is coming.
And the insiders know it. Did you know that NVIDIA CEO Jensen Huang just sold $713 million of NVIDIA?
In this urgent new exposé, legendary market forecaster Porter Stansberry reveals why the tech giant is poised to topple.
But it’s not just NVIDIA. If you have any of these tech stocks in your portfolio, you need to see Porter’s warning immediately.
