#Economists oppose the Fed investing in Bitcoin.#
Hot Topic Overview
Overview
Recently, old-school economists in the US have voiced their opposition to the proposal of allocating US reserve funds to Bitcoin. Steve Hanke, a professor at Johns Hopkins University, argues that shifting funds to Bitcoin could hinder economic growth as these savings are not invested in real capital assets. He emphasizes the importance of productivity improvements for enhancing living standards and calls the idea of Bitcoin reserves "the dumbest idea." Despite this, Senator Cynthia Lummis has proposed the "Bitcoin Act" to establish a Bitcoin strategic reserve, aiming to purchase 1 million BTC. The heart of this debate lies in whether Bitcoin can be a viable reserve asset and whether it would be a distraction.
Ace Hot Topic Analysis
Analysis
Recently, old-school American economists have strongly opposed the proposal to allocate US reserve funds to Bitcoin. Steve Hanke, a professor at Johns Hopkins University, believes that shifting funds to Bitcoin would hinder economic growth because these savings are not invested in real capital assets, while increased productivity is crucial for improving living standards. He called the idea of Bitcoin reserves "the dumbest idea." Hanke's views reflect the prevailing sentiment in traditional economics circles towards cryptocurrencies, which lack intrinsic value and cannot serve as reliable reserve assets. On the other hand, Senator Cynthia Lummis proposed the "Bitcoin Act" to establish a Bitcoin strategic reserve, aiming to purchase 1 million BTC. This proposal has sparked heated debates about the feasibility of Bitcoin as a reserve asset. Supporters argue that Bitcoin's decentralized, censorship-resistant, and scarce nature makes it an ideal reserve asset. However, opponents point out that Bitcoin's price is highly volatile, lacks real-world applications, and poses security risks, making it unsuitable as a reserve asset. This debate reflects the clash between the traditional financial system and emerging digital assets, highlighting people's reflections on the future of the monetary system.