Larry Summers, former US Treasury Secretary, slammed President Trump’s plan to create a national Bitcoin reserve as “crazy.” He questioned the plan’s purpose and suggested it’s more about politics than sound economics.
Summers’ Skepticism
Summers, who oversaw the US gold reserve under President Clinton, argued that unlike tangible assets like gold or oil, Bitcoin is essentially useless as a reserve. He believes the proposal is primarily designed to appease wealthy donors to Trump’s campaign.
The Proposal: What’s the Plan?
Trump’s idea, first floated at a Bitcoin conference, is to build a massive Bitcoin reserve to boost US financial strength and outmaneuver rivals like China. He worries that if the US doesn’t act, other countries will dominate the cryptocurrency market. Senator Cynthia Lummis has even proposed legislation to buy one million Bitcoin over five years – a roughly $100 billion investment. Proponents claim this could reduce the national debt and strengthen the dollar.
Crypto’s Influence on Politics
Bitcoin’s price has skyrocketed recently, partly due to investor optimism surrounding Trump’s pro-crypto stance. Crypto-related Super PACs have reportedly donated millions to Trump’s campaign, influencing the political landscape and boosting pro-crypto lawmakers. Trump is also forming a crypto advisory council and appointed David Sacks as the White House’s AI and crypto czar.
The Critics Speak Out
However, the plan isn’t without its detractors. Peter Schiff, CEO of Euro Pacific Precious Metals, voiced concerns about Bitcoin’s volatility and the risk of using taxpayer money to buy it. He argues that constantly buying Bitcoin to maintain its perceived value would weaken the dollar. He believes a reserve of something you can’t sell is worthless.
The Current Situation
At the time of writing, Bitcoin is trading around $97,933, down slightly. The debate over Trump’s Bitcoin reserve proposal continues, with strong opinions on both sides.
