Recently, Trump delivered a speech at the 2024 Bitcoin Conference, Trump said that if he is elected, he will fire the current SEC Chairman Gary Gensler, promise not to sell Bitcoin in the hands of the United States government, and include it in the national strategic reserve, develop the energy industry, and support Bitcoin mining.
Trump even predicted that bitcoin would surpass gold in market capitalization. Trump also called the cryptocurrency industry "the steel industry of 100 years ago" and promised to turn United States into the world's "crypto capital" and "Bitcoin superpower."
Compared to the past, Trump's attitude towards bitcoin has changed 180 degrees. At the same time, Trump has recently repeatedly called for the dollar to be devalued, and said that the strong dollar has hit United States manufacturing hard.
Trump's announcement that he plans to include bitcoin in the national strategic reserve may be for the sake of US debt, not just for the election and to attract voters who support digital currencies.
At the same time, after Trump's speech, United States Senator Cynthia · Loomis also put forward the idea of a strategic reserve for bitcoin. Loomis reiterated Trump's pledge and said that the United States will plan to buy 1 million bitcoins in the next five years, which is 5% of the world's supply, and will hold it for at least 20 years.
Loomys said the United States move has only one purpose: to reduce United States' debt. By 2045, the United States Bitcoin Strategic Reserve will be able to halve United States' debt.
Loomys also said that since the 80s, the size of United States' national debt has doubled rapidly every eight years on average. At the current level of $35 trillion, the size of United States' national debt could increase significantly to about $200 trillion in 2045.
Therefore, this means that the United States may pay off its debts by printing large amounts of money in the future, depreciating the dollar, and pushing up dollar-denominated bitcoin by buying and speculating on bitcoin in large quantities, and using bitcoin to repay the US debt.
In recent years, although overseas countries such as Japan and United Kingdom have continued to increase their holdings of U.S. bonds, due to the rapid growth of United States government bonds, it has become more and more difficult for overseas countries to undertake them, and the proportion of U.S. bonds held by overseas countries has been declining. At the beginning of 2000, the holdings of U.S. bonds by overseas countries were as high as 55%, but now they have dropped sharply to 23%.
With the rapid expansion of U.S. debt, Japan with friendly relations with United States, and sluggish economic growth in countries such as United Kingdom, it will become increasingly difficult for overseas investors to take on the huge amount of U.S. debt.
In the future, United States Treasuries will become increasingly dependent on domestic investors in United States. However, due to the high cost of fiscal deficits and interest on national debt in United States in recent years, the United States has continued to repay its debt by borrowing new debt to repay old debt, resulting in the scale of United States' national debt getting bigger and bigger.
At present, the size of domestic investors' holdings of U.S. bonds has risen to about 77% in United States, and it is United States difficult to deal with the debt crisis by defaulting on debts. This will lead to heavy losses for United States investors and a collapse of United States financial markets. Hit the United States financial market and the real economy hard.
In the medium to long term, the United States will have to pay its debts by printing money in the future. But printing a lot of money will lead to a sharp depreciation of the dollar and a spike in inflation.
Therefore, the United States plans to push up dollar-denominated bitcoin by buying and speculating on it in large quantities. Bitcoin as a reservoir for a significant depreciation of the dollar. On the other hand, the United States will also use the inflated bitcoin to pay off its debt, by creating a bitcoin bubble to pay off the debt.
United States this plan, if implemented, will have far-reaching implications. Since the essence of this plan is United States to try to repay debts by creating a new asset bubble, it will have a serious negative impact on the international status, creditworthiness and image of United States, the US dollar and US debt.