An economist suggests a wild scenario: former President Trump’s Bitcoin plans could dramatically increase Bitcoin’s value, similar to the oil price surge in the 1970s.
Bitcoin: The New Oil?
Macroeconomic analyst Luke Gromen thinks Trump’s talk about accumulating a massive Bitcoin stockpile isn’t just political posturing. He points to Trump’s statement calling Bitcoin “the new oil” and his comments about potentially using Bitcoin to pay down US debt. Gromen found this particularly intriguing, prompting him to explore the potential economic implications.
Historical Parallels: The 1973 Oil Crisis
Gromen draws a parallel to the massive oil price increase of 1973-74, where prices quadrupled. He cites a former Saudi oil minister’s account of a meeting where the price hike was allegedly orchestrated. This, he argues, allowed the US to use “petrodollars” to manage its debt, effectively shifting from a gold standard to an oil standard.
A Bitcoin-Fueled Economic Strategy?
Gromen speculates that a similar strategy could be employed with Bitcoin. A massive increase in Bitcoin’s price could boost stablecoins, leading to increased demand for US Treasury bills. This, in turn, could help alleviate the US’s massive debt problem. He points to recent Treasury reports and comments from former House Speaker Paul Ryan as supporting evidence for this theory. These reports and comments suggest that influential figures are considering the use of digital assets to address the US debt crisis.
Weakening and Strengthening the Dollar Simultaneously
Gromen’s idea is to use Bitcoin to simultaneously weaken the dollar (by inflating Bitcoin’s value) while strengthening the dollar system (by attracting global capital into US Treasury bills via stablecoins). This, he believes, could be a way to address the US debt problem and stimulate the economy.
A Speculative, But Intriguing, Idea
Gromen acknowledges that this is a speculative theory and not a widely held view. However, he finds the convergence of various factors—Treasury reports, political statements, and historical parallels—compelling enough to warrant consideration. He believes that powerful players are seriously exploring this possibility. At the time of this writing, Bitcoin was trading at $96,751.
