Bitcoin in the Trump Era: A Cryptocurrency Cure for America's $36 Trillion Debt Crisis?Over the past few years, high-profile figures and investors in the cryptocurrency industry have spent hundreds of millions of dollars promoting pro-cryptocurrency candidates into the US Congress. This has resulted in the current US government being one of the most pro-Bitcoin administrations in history
Bitcoin in the Trump Era: A Cryptocurrency Cure for America's $36 Trillion Debt Crisis?
The sharp decline in US 10-year Treasury yields, coupled with simultaneous rises in the stock and bond markets, foreshadows new challenges for financial markets under the incoming Treasury Secretary. Despite a 67-page risk warning from the Federal Reserve highlighting a debt exceeding $36 trillion, the "Make America Great Again" mantra continues to inspire Trump supporters. However, can a Trump return truly resolve the risk of America's massive national debt? And how can a $36 trillion debt be addressed? The passage of the "Bitcoin Rights Act" offers a compelling perspective.
On November 22nd, Pennsylvania passed the "Bitcoin Rights Act" by a vote of 176-26, pushing the discussion of Bitcoin as a strategic reserve currency to a fever pitch. This news propelled Bitcoins price close to $100,000, suggesting that under a renewed Trump administration, Bitcoin could become as important an asset as the US dollar, Treasuries, and stocks.
Over the past few years, high-profile figures and investors in the cryptocurrency industry have spent hundreds of millions of dollars promoting pro-cryptocurrency candidates into the US Congress. This has resulted in the current US government being one of the most pro-Bitcoin administrations in history. According to the Federal Election Commission, cryptocurrency-related political action committees contributed $245 million to support Trump's campaign in the current election cycle. This massive sum represents more than simple political donations; it reflects sophisticated support for a specific candidate, arguably altering the course of the election.
A Trump administration would not only aggressively push for cryptocurrency legalization but also plan to incorporate Bitcoin into the US federal government's reserve currency system. Proponents argue that Bitcoin's decentralized nature and fixed supply make it a powerful inflation hedge, comparable to gold. They believe that a surge in cryptocurrency prices would attract significant capital into the cryptocurrency trading industry, mitigating financial crisis risks without impacting US prices.
However, this claim is contested. Gold already possesses anti-inflationary properties and is a US reserve asset. Positioning Bitcoin as another anti-inflationary tool seems redundant. Therefore, some argue that the inflation-hedge narrative is a smokescreen; the real goal is to replace the dollar as the legal tender within the US, ultimately challenging the power of American bankers.
Making Bitcoin a US reserve currency would offer two main advantages: first, a surge in Bitcoin's price could be used to repair America's fiscal problems, potentially using Bitcoin as collateral to borrow new funds when Treasury bonds become unrepayable; second, the US president would no longer be beholden to the Federal Reserve in monetary policy, freeing Trump from concerns about fiscal funding. But is this truly achievable?
The stark reality of the US fiscal deficit cannot be ignored. Despite Elon Musks efforts to seek spending cuts, the US national debt has exceeded $36 trillion under the Biden administration. Musk stated on November 23rd, "The US is heading towards bankruptcy at an alarming rate." This means that a Trump administration would first need to confront the massive national debt, with funding shortages severely limiting policy implementation. The return of manufacturing, the deportation of illegal immigrants, and other initiatives all require substantial funding where will it come from?
Some believe that a Musk-led government efficiency drive would cut defense spending under a Trump administration. However, this would be difficult. The Department of Defense controls the nations military might and, like the Federal Reserve (which controls monetary policy), is an untouchable force within the US government. Trump antagonizing both powerful entities simultaneously would be extremely risky. Therefore, Trump may need to explore alternative avenues to solve funding shortages.
One potential method is leveraging Bitcoin to "harvest" profits. Reports suggest the US currently holds approximately 200,000 Bitcoins. If a Trump administration were to release positive news to inflate Bitcoin's price and then use US military strength to force allies to recognize Bitcoin's legal status and agree to Bitcoin settlements, the US could easily convert its Treasury bonds into Bitcoin, ultimately reducing the fiscal deficit.
The incoming Treasury Secretary's suggestions indicate that Trump will announce the next Federal Reserve chair and pre-emptively disclose monetary policy. This implies the possibility of two Federal Reserves operating concurrently for two years. While this would increase the difficulty of implementing the current Federal Reserve's policies, it could effectively resolve funding shortages in a Trump administration. With two Federal Reserves, two legal tender currencies might exist, echoing the cryptocurrency industry's significant political donations in this election cycle. After 2025, the US government and the cryptocurrency industry might orchestrate an unprecedented "harvest" of global cryptocurrency investors.
In short, the US deep state appears to be attempting to use Bitcoin to resolve its $36 trillion debt problem. This mirrors the strategy employed after the Federal Reserve withdrew from the Bretton Woods system, forcefully decoupling the dollar from gold and linking it to oil to alleviate debt through dollar devaluation. Now, with the dollar decoupling from oil and potentially linking to Bitcoin, a similar "bait and switch" tactic may be employed to evade repayment of unrepayable Treasury bonds. If the Federal Reserve doesn't cooperate, a new Federal Reserve might be created.
Sources:
- US Treasury Bond Sell-off Ebbs! Traders Enter to "Bottom-Fish," Locking in 4.5% High Yields --- Wall Street News (Translated from Chinese)
- "Buying" the Most Pro-Crypto US Congress in History, How Did the Crypto Community Do It? --- Wall Street News (Translated from Chinese)
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