Senator Cynthia Lummis is definitely raising the stakes with her audacious proposal. Specifically, she advocates for the U.S. government to purchase 200,000 Bitcoin per year over the next five years for a whopping one million BTC. The plan? Save it for 20 years and use the savings to cut the national debt in half. It’s audacious, it’s unconventional, and it dares us to ask some big questions. Is this a financial master plan worthy of the highest Nobel prize in economics, or an irresponsible wager of taxpayer dollars?
Debt Reduction Savior Or Digital Mirage?
Lummis frames Bitcoin as a critical asset in tackling the national debt, pointing to the dollar's devaluation after the COVID-19 pandemic. Her BITCOIN Act goes even further, calling for the establishment of protected Bitcoin vaults operated by the Treasury Department. This is where the “unexpected connections” part comes in. We’re asking the public to trust a government hardly known for its fiscal derring-do to manage a highly unpredictable asset like Bitcoin. It’s the equivalent of trusting a firestarter to operate a fireworks factory.
The crux of Lummis’ argument rests on the assumption that Bitcoin will increase in value by 7000% over the next twenty years. Though Bitcoin’s meteoric rise is certainly awe-inspiring, there’s no forgetting its past littered with gut-wrenching price swings. What if Bitcoin does not go to the moon after all? Rather than landing safely, it instead crashes and burns, leaving the U.S. government with effectively a million worthless digital tokens. The impacts on taxpayer faith (and your pocketbook) would be catastrophic.
Think about it. We’ve witnessed governments from ancient times to today attempt to intervene in markets, often with catastrophic results. From the trigger of the South Sea Bubble, flat money go boom to more recent currency crises, the temptation to meddle is ever present. Are we really going to trust the U.S. government to refrain from arm-twisting in the Bitcoin market? That becomes even more unlikely if Bitcoin’s value starts to plummet sharply. And what would that intervention look like? Selling off holdings to stem losses? Artificially inflating the price? Both scenarios would be a disaster leading to catastrophic ripple effects on the entire crypto ecosystem.
Meme Coins, Serious Risks, Investor Protection
Lummis thinks meme coins should only be advertised as a form of entertainment, not an investment. This view is a big reason why it’s critical to draw clear lines in the crypto world. She cites Melania Trump’s defunct meme coin marketing as a case study for using entertainment marketing to entertain the audience. This distinction is very important for investor protection. Unfortunately, inexperienced investors fall victim to the excitement. This creates a dangerous distinction between “entertainment” and “investment.”
The truth is, the crypto market is mostly unregulated, which leaves it open to scams and manipulation. Lummis is passionate about creating bright lines. Ultimately, it’s on the new individual investor to do their own due diligence and grasp all the risks at play. So, let’s not kid ourselves. How many of us would bother to read the small details before betting our life savings on the next Dogecoin?
This is where the anxiety kicks in. Imagine this—the U.S. government has a huge pile of Bitcoin. Now it’s facing some of the most damning accusations of insider trading and market manipulation imaginable. The resulting scandal will drive public confidence in the federal government to its lowest levels ever. It will further undermine the already short-lived crypto market.
Fiscal Responsibility First, Then Bitcoin?
Lummis insists on one important point, the success of her Bitcoin strategy hinges on Congress being fiscally responsible. She would like to see revenues match expenditures, and an emphasis on long-term economic stability. This is the critical prerequisite. Here's the rub: Congress has a long and ignominious history of failing to be fiscally responsible. To assume that they’ll have some kind of epiphany and do the right thing just because they’re in possession of Bitcoin is, quite honestly, delusional.
That’s akin to claiming, “I’ll run marathons as soon as I shed 100 pounds.” This is a laudable goal, but as it stands the odds of success here are very slim without fixing some of the underlying problems. In Congress’s defense, those problems are cultural political gridlock, short-sighted decision-making, chronic addiction to deficit spending.
Let’s not continue to rely on volatile assets like Bitcoin to bail us out of our financial difficulties. Instead, we need to focus on truly reforming our tax code, spending priorities, and the way we construct a budget all together. We will have to engage directly on the hard conversations of entitlement reform, tax hikes, and spending reductions. Politicians from both parties have avoided these questions for much too long.
No doubt Lummis’ proposal is a bold one, and we applaud her passion for Bitcoin. Before we hand the U.S. government a million Bitcoins, we need to make sure they feel the weight of these difficult questions. Are we even ready to deal with, or offset the impact of, the outcome of this grand experiment? Is this really the answer to our fiscal woes? Or is this just another shiny object leading us to believe that the hard work of implementation is done? Finally, is this a smart risk or a foolish bet on the fate of our economy? The truth, I fear, is much more complicated than a simple yes or no.
