Former New York Fed President: Bitcoin reserves would be a bad deal for Americans

Bill Dudley, former New York Fed president, said that Bitcoin prices have risen more than 40% since Trump won the U.S. presidential election, in part because people hope that he will support the creation of a government reserve of the cryptocurrency. He supported the idea during his campaign, and lawmakers who support cryptocurrencies have proposed ways to achieve this goal. It's hard to imagine how this would be any good for most Americans. But what good would it be for the government or for people who don't hold Bitcoin? There is no benefit. There is no exit strategy, so the purpose is to drive up inflation rather than create value for the government - the government will be forced to hold volatile tokens that do not generate any income. To provide funds for purchases, the Treasury will either have to borrow (thereby raising the cost of debt servicing) or the Fed will have to create money (thereby exacerbating inflation). The latter is almost indistinguishable from the Fed monetizing U.S. government debt (similarly, the same would be true of Congressional legislation that directs the Fed to use the government's gold reserves). (Jin Shi)