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Evaluating a Strategic Bitcoin Reserve for the United States

2 points by noch 2y ago

rhelz 2y ago
A proposed "Bitcoin Reserve" would just be the U.S. government taking money from taxpayers and giving it to owners of bitcoin. Why? Well, right now, every dollar that somebody makes selling bitcoin is a dollar which somebody else spends buying bitcoin. On every individual transaction, the buyer spends exactly what the seller makes. Net-net its zero. Even if you total up all the money gained and lost on bitcoin, the total will be the same amount, whether expressed in dollars, euros, or rubles: Zero. But....what if the U.S. just starts buying bitcoin and holding it. Assume the U.S. never sells it, just like the never sell any gold from the strategic gold reserve. Well... ...That in effect reduces the supply of bitcoin, which will drive up the prices. The money which the U.S. spends to buy those bitcoin go to people who sell bitcoin to the U.S. And the U.S. gets nothing back from it, ever. I.E. it is tantamount to just welfare for bitcoin owners. I.E. the government just taking taxpayer money and giving it to owners of bitcoin. I have to admit, I really admire just how seductive this scam is. You take a wolf (which is welfare payments) and dress it up in the sheepskin of libertarian/screw government controlled currency. It pushes every button which somebody who is suspicious of fiat currency. People who otherwise would not support transfer payments from moral principles will be seduced into supporting this. Of course, people who have no moral principles about transfer payments (as long as they are transfer payments to themselves) support it.
- noch 2y ago
  > Of course, people who have no moral principles about transfer payments (as long as they are transfer payments to themselves) support it. Aren't all democratic elections about electing the person who will transfer wealth into the voters' hands? I think all voters have no qualms about transfer payments. > Even if you total up all the money gained and lost on bitcoin, the total will be the same amount, whether expressed in dollars, euros, or rubles: Zero. Not exactly, because the fiat denominator is inflated away by the printing of bank reserves , but the bitcoin supply is fixed and constant forever. That's what it means to hold an appreciating hard asset relative to fiat, in my opinion. > the government just taking taxpayer money and giving it to owners of bitcoin. Taxpayer money is a bit of a smokescreen in my opinion. The debt-to-gdp ratio is where the real story of government expenditure.
  - rhelz 2y ago
    // Aren't all democratic elections about electing the person who will transfer wealth into the voters' hands? // Interesting question. Consider, for example, Eisenhower's building the interstate highway system, which boosted the productivity of the entire nation. Or the Apollo space program, which yielded back somewhere between 5 and 7 dollars for every dollar spent, by creating new technologies and whole new industries. Contrast with the bitcoin reserve. Every dollar spent goes from the pockets of the taxpayers to the pockets of the bitcoin sellers, without doing anything to boost productivity, to create new technology, etc. // That's what it means to hold an appreciating hard asset relative to fiat, in my opinion. Well, bitcoin is not hard asset (it is created by consensus, and it has no intrinsic material form) nor is it intrinsically appreciating. It could be outlawed, have a flat tax imposed on it, or become obsoleted by, say, quantum computers. But let's grant, for sake of argument, that in the long run, relative to puny fiat currencies like the dollar (which is merely backed by the full faith and credit of the U.S.) the price of bitcoin will generally keep increasing, due to inflation of the various fiat currencies. You may very well be able to sell your bitcoin for nominally higher prices, but in constant dollars, if you add up every bitcoin transaction from its inception to infinity, the total amount of dollars will still be zero. // Taxpayer money is a bit of a smokescreen in my opinion. However you want to phrase it, if we create a trillion-dollar bitcoin reserve, that trillion dollars has to come from somewhere. There's no such thing as a magic money-generating machine. End of the day, wealth comes from the productivity of laborers. If you spend money to increase their productivity, total wealth increases. If you just shuffle your money back and forth between gold and bitcoin, that does nothing to increase anybody's productivity. // think all voters have no qualms about transfer payments // Certainly, not enough voters have qualms about transfer payments. But morality is just for suckers, right?
    - noch 2y ago
      > There's no such thing as a magic money-generating machine. Banks literally print bank reserves out of nothing. It's one of the more hilarious aspects of modern economics.
      - 2y ago

2 points by noch 2y ago

A proposed "Bitcoin Reserve" would just be the U.S. government taking money from taxpayers and giving it to owners of bitcoin. Why? Well, right now, every dollar that somebody makes selling bitcoin is a dollar which somebody else spends buying bitcoin. On every individual transaction, the buyer spends exactly what the seller makes. Net-net its zero. Even if you total up all the money gained and lost on bitcoin, the total will be the same amount, whether expressed in dollars, euros, or rubles: Zero. But....what if the U.S. just starts buying bitcoin and holding it. Assume the U.S. never sells it, just like the never sell any gold from the strategic gold reserve. Well... ...That in effect reduces the supply of bitcoin, which will drive up the prices. The money which the U.S. spends to buy those bitcoin go to people who sell bitcoin to the U.S. And the U.S. gets nothing back from it, ever. I.E. it is tantamount to just welfare for bitcoin owners. I.E. the government just taking taxpayer money and giving it to owners of bitcoin. I have to admit, I really admire just how seductive this scam is. You take a wolf (which is welfare payments) and dress it up in the sheepskin of libertarian/screw government controlled currency. It pushes every button which somebody who is suspicious of fiat currency. People who otherwise would not support transfer payments from moral principles will be seduced into supporting this. Of course, people who have no moral principles about transfer payments (as long as they are transfer payments to themselves) support it.

noch 2y ago
> Of course, people who have no moral principles about transfer payments (as long as they are transfer payments to themselves) support it. Aren't all democratic elections about electing the person who will transfer wealth into the voters' hands? I think all voters have no qualms about transfer payments. > Even if you total up all the money gained and lost on bitcoin, the total will be the same amount, whether expressed in dollars, euros, or rubles: Zero. Not exactly, because the fiat denominator is inflated away by the printing of bank reserves , but the bitcoin supply is fixed and constant forever. That's what it means to hold an appreciating hard asset relative to fiat, in my opinion. > the government just taking taxpayer money and giving it to owners of bitcoin. Taxpayer money is a bit of a smokescreen in my opinion. The debt-to-gdp ratio is where the real story of government expenditure.
- rhelz 2y ago
  // Aren't all democratic elections about electing the person who will transfer wealth into the voters' hands? // Interesting question. Consider, for example, Eisenhower's building the interstate highway system, which boosted the productivity of the entire nation. Or the Apollo space program, which yielded back somewhere between 5 and 7 dollars for every dollar spent, by creating new technologies and whole new industries. Contrast with the bitcoin reserve. Every dollar spent goes from the pockets of the taxpayers to the pockets of the bitcoin sellers, without doing anything to boost productivity, to create new technology, etc. // That's what it means to hold an appreciating hard asset relative to fiat, in my opinion. Well, bitcoin is not hard asset (it is created by consensus, and it has no intrinsic material form) nor is it intrinsically appreciating. It could be outlawed, have a flat tax imposed on it, or become obsoleted by, say, quantum computers. But let's grant, for sake of argument, that in the long run, relative to puny fiat currencies like the dollar (which is merely backed by the full faith and credit of the U.S.) the price of bitcoin will generally keep increasing, due to inflation of the various fiat currencies. You may very well be able to sell your bitcoin for nominally higher prices, but in constant dollars, if you add up every bitcoin transaction from its inception to infinity, the total amount of dollars will still be zero. // Taxpayer money is a bit of a smokescreen in my opinion. However you want to phrase it, if we create a trillion-dollar bitcoin reserve, that trillion dollars has to come from somewhere. There's no such thing as a magic money-generating machine. End of the day, wealth comes from the productivity of laborers. If you spend money to increase their productivity, total wealth increases. If you just shuffle your money back and forth between gold and bitcoin, that does nothing to increase anybody's productivity. // think all voters have no qualms about transfer payments // Certainly, not enough voters have qualms about transfer payments. But morality is just for suckers, right?
  - noch 2y ago
    > There's no such thing as a magic money-generating machine. Banks literally print bank reserves out of nothing. It's one of the more hilarious aspects of modern economics.
    - 2y ago