#Economists oppose the Fed investing in Bitcoin.#
Hot Topic Overview
Overview
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, thus failing to increase productivity and improve living standards. He even called the idea of a Bitcoin reserve "the dumbest idea ever." This controversy stems from Senator Cynthia Lummis's proposed "Bitcoin Act," which aims to establish a Bitcoin strategic reserve by purchasing 1 million BTC. This debate has sparked controversy over the feasibility of Bitcoin as a reserve asset and its potential for distraction.
Ace Hot Topic Analysis
Analysis
Recently, old-school American economists 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 a Bitcoin reserve "the dumbest idea ever." Hanke's perspective suggests that Bitcoin is a speculative asset lacking intrinsic value, and investing funds in it would impede economic development. He believes that funds should be invested in real capital assets that can boost productivity, such as infrastructure, technology, and human capital, to foster economic growth. On the other hand, Senator Cynthia Lummis has proposed the "Bitcoin Act" to establish a Bitcoin strategic reserve, aiming to purchase 1 million BTC. The core of this debate lies in whether Bitcoin can serve as a viable reserve asset. Proponents argue that Bitcoin's decentralized and inflation-resistant nature makes it a secure reserve asset. Opponents, however, contend that Bitcoin's high price volatility and lack of intrinsic value disqualify it as a reserve asset. This debate reflects the evolving perception and attitude towards digital currencies and the contemplation of the future financial system.