Coin Stories News Block: Could Bitcoin Reserve Slash National Debt? Fed Rate Cuts, Institutional Adoption Accelerates, Major Pension Fund Buys Bitcoin
Aug 1, 2024
Senator Lummis, a U.S. Senator known for her advocacy of Bitcoin legislation, discusses her groundbreaking proposal for a national Bitcoin reserve. She explores the economic implications of this initiative and how it might impact national debt. The conversation also delves into the Federal Reserve's potential rate cuts and the accelerating trend of institutional adoption of Bitcoin. Lummis shares insights on significant investments from pension funds, further positioning Bitcoin as a key player in modern financial strategies.
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US Bitcoin Strategic Reserve Proposal
- Senator Cynthia Lummis proposes the Treasury buy 200,000 BTC per year for five years as a strategic reserve.
- The bill ties sales to debt repayment and suggests funding via Fed remittances and gold revaluation.
Fed Profits May Not Cover Purchases
- The bill expects $6 billion of Fed net earnings through 2025–2029 to fund purchases, but the Fed is currently operating at a loss.
- Unless rate cuts restore Fed profits, that funding source looks unrealistic in the near term.
Gold Revaluation As A Funding Mechanism
- Lummis suggests revaluing government gold (booked at ~$42/oz) to market levels and using the gain to buy Bitcoin.
- This mirrors past revaluation moves like FDR's, but carries debates over inflationary and fiscal consequences.