#Economists oppose the Fed investing in Bitcoin.#
Hot Topic Overview
Overview
The debate over whether the Federal Reserve should invest in Bitcoin has intensified recently. Old-school economists, such as Johns Hopkins University professor Steve Hanke, strongly oppose the idea. They argue that diverting funds to Bitcoin would hinder economic growth, as these savings are not invested in real capital assets, and productivity improvements are crucial for improving living standards. Hanke even called the idea of a Bitcoin reserve "the dumbest idea ever." On the other hand, Senator Cynthia Lummis has proposed the "Bitcoin Act" to establish a Bitcoin strategic reserve, aiming to purchase 1 million BTC. At the heart of this debate lies the question of whether Bitcoin can become a viable reserve asset or is merely a distraction.
Ace Hot Topic Analysis
Analysis
Recently, old-school economists in the United States 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 could hinder economic growth because these savings are not invested in real capital assets, while productivity improvements are crucial for improving living standards. He called the idea of Bitcoin reserves "the dumbest idea." Hanke's views reflect the prevailing view of the traditional economics community on cryptocurrencies, which they believe lack intrinsic value and cannot serve as a reliable reserve asset. On the other hand, Senator Cynthia Lummis proposed the "Bitcoin Act" to establish a Bitcoin strategic reserve, aiming to purchase 1 million BTC. This debate reflects the divergence of opinions on the potential of cryptocurrencies as a reserve asset. Whether Bitcoin can become a mainstream reserve asset in the future remains to be seen.