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December 15, 2024

How America Can Escape the Debt Trap - Part II: Is Bitcoin the Answer?

Since Trump’s election, Bitcoin has risen some 50%, set a new all-time high, and broken through the psychologically relevant $100,000 mark.


Other cryptocurrencies have advanced as well, in some cases generating even greater upside.


Trump has celebrated (and even taken credit for) the rally. His cabinet and other appointments are shaping up to be a group of unabashed advocates for Bitcoin and digital assets.


Crypto investors are clearly responding with enthusiasm to positive developments in Washington.


In the first 76report installment of How America Can Escape the Debt Trap, we analyzed several important aspects of the national debt problem, including:

  • the dangerous inflationary dynamic that excessive debt can trigger

  • what bond markets are currently signaling

  • Trump’s growth-oriented strategy to manage the debt burden

  • the types of assets that investors should focus on to protect their savings


In this second part of the discussion, we focus on conversations now taking place that position Bitcoin as a potential solution to America’s fiscal challenges.


We also analyze the opportunities these evolving policies present to individual investors.


TEAM TRUMP LOVES BITCOIN


Last week, Eric Trump, speaking at times on behalf of his father at a Bitcoin conference in Abu Dhabi, predicted Bitcoin is headed to $1 million per coin.


Eric Trump’s keynote speech is worth watching to get a sense of just how committed the Trump movement is to disrupting traditional finance, or TradFi, with decentralized blockchain-based finance, or DeFi.

CAN BITCOIN FIX THE DEBT?


The possible creation of a Bitcoin strategic reserve, which has been proposed by Senator Cynthia Lummis of Wyoming, has led to much discussion lately on what role Bitcoin could play specifically in the context of addressing our excessive national debt.


The Lummis bill is known as the Boosting Innovation, Technology, and Competitiveness through Optimized Investment Nationwide Act of 2024 or the BITCOIN Act of 2024.


The bill calls for the federal government to purchase up to 1 million Bitcoin (about 5% of the current supply) over a 5 year period.


While legislative action may take some time, there is also speculation that Trump will move forward with a preliminary version of a strategic reserve through an Executive Order, shortly after his inauguration.  


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