#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 could hinder economic growth, as these savings are not invested in real capital assets, while productivity improvements are crucial for improving living standards. He even called the idea of Bitcoin reserves "the dumbest idea." Despite this, Senator Cynthia Lummis still proposed the Bitcoin Act to establish a Bitcoin strategic reserve, aiming to purchase 1 million BTC. This debate has sparked questions about the feasibility of Bitcoin as a reserve asset and whether it is merely a 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, thereby dragging down the economy. He emphasizes the importance of productivity improvements for enhancing living standards and calls the idea of Bitcoin reserves "the dumbest idea." Hanke's views stand in stark contrast to Senator Cynthia Lummis's proposed "Bitcoin Act," which aims to establish a Bitcoin strategic reserve, purchasing 1 million BTC. At the heart of this debate lies the question of whether Bitcoin can serve as a viable reserve asset. Proponents argue that Bitcoin can act as a decentralized reserve asset, while opponents contend that Bitcoin lacks intrinsic value and its volatility would negatively impact the economy. Currently, the debate over whether Bitcoin should become a reserve asset continues, with both sides presenting their arguments, and the ultimate outcome remains to be seen.