Lawrence Summers, former U.S. Treasury Secretary, has strongly rejected the idea of the government creating a Bitcoin reserve. Speaking on Bloomberg Television’s Wall Street Week, Summers called the proposal “crazy” and said it was mainly intended to appease political donors. He argued there is no good reason for the government to hold Bitcoin as an asset.
Trump’s Bitcoin Proposal
The idea gained traction after President-elect Donald Trump suggested that the government keep Bitcoin tokens seized from criminals. These tokens, estimated at around 200,000, have increased in value. Some of Trump’s allies have proposed expanding this reserve to help reduce the national debt, hoping Bitcoin’s price will continue to rise.
Summers, now a professor at Harvard University, dismissed the idea. He compared it to past government reserves like oil or gold. He emphasized that Bitcoin has no tangible value like oil or gold, making it an impractical asset for national reserves.
Of all the prices to support, why would the government choose to support, by accumulating a sterile inventory, a bunch of Bitcoin?
Alongside his criticism of the Bitcoin reserve idea, Summers also addressed the issue of federal spending. Elon Musk, an ally of Trump, has set a goal to cut $2 trillion from government spending. However, Summers pointed out that the entire federal payroll is less than this amount. He noted,
We’re either going to have to have the political courage to tell people that things they felt entitled to for a long time they’re not going to be entitled to” or to raise taxes.
Summers’ remarks come at a time when the world is grappling with national budget issues. On Wednesday, the French government fell due to the budget crisis. He pointed out that the tendency to resist fiscal consolidation is a typical issue for governments globally.
Bitcoin Reaches Record High
However, Summers was highly skeptical of the reserve plan, and Bitcoin continues to break records. Bitcoin recently reached an all-time high of $103,620, which brought its market capitalization to over $2 trillion.
The Story of Resilience: Journey of Bitcoin from $0-$100KPresident-elect Donald Trump applauded Bitcoin users when the currency reached this level. He remained a bullish advocate for cryptocurrencies, and thus, the Trump administration could well be set to increase its involvement in the sector.
