Former New York Fed Chair: Bitcoin reserves would be a "bad idea" for Americans

ChainCatcher news, according to Jinshi reports, former New York Fed Chairman Bill Dudley stated that since Trump won the U.S. presidential election, the price of Bitcoin has risen by over 40%, partly because people hope he will support the establishment of a government reserve for this cryptocurrency. He supported this idea during his campaign, and legislators who back cryptocurrencies have also proposed ways to achieve this goal. It is hard to imagine what benefits this would bring to most Americans.

However, what benefits would establishing a Bitcoin reserve have for the government or for those who do not hold Bitcoin? None. There is no exit strategy, so its purpose is to drive up inflation rather than create value for the government— the government would be forced to hold volatile tokens that generate no income. To provide purchasing funds, the Treasury must either borrow (thereby increasing debt service costs) or the Federal Reserve must create money (thereby exacerbating inflation). The latter is almost indistinguishable from the Federal Reserve monetizing U.S. government debt (similarly, directing the Federal Reserve to use the government's gold reserves according to congressional legislative proposals would be the same).