Here Comes The Old Republican Bitcoin Pump And Dump!
Republican Senator Cynthia Lummis has a bill to make some government Bitcoin reserves, WCGW?
The new extra-Trump-slobbering Congress hasn’t been sworn in yet, but Republican Senator Cynthia Lummis, who has named herself “the Bitcoin Senator,” is hot to trot with a bill for the government to buy $100 billion worth of Bitcoin, or about five percent of the global supply.
You’ll remember that a certain Mr. Bankrupted-Six-Businesses has been pushing that idea too, to use the US’s Federal Reserve dollars to buy Bitcoins. And then he’ll pay off the national debt with it!
Sure, Jan. What could go wrong, buying a highly volatile commodity at the highest price it’s ever been, which is backed by nothing, has no intrinsic value and becomes completely inaccessible if you happen to lose the keys (a whoops that has already happened to 20 percent of the coins)?
Of course the bill is a stupid acronym name — the Boosting Innovation, Technology, and Competitiveness through Optimized Investment Nationwide Act of 2024. BITCOIN, GET IT?! And it would require the US Treasury to buy one million Bitcoins over five years, to be held for at least 20 years, to create a Strategic Bitcoin Reserve. Here, watch her yowl about it, if you want.
Long story short, Lummis and Guy Who Bankrupted His Own Casino want Congress to cash out the government’s assets and give the actual money to the cryptobros, by buying up their Bitcoin. And then the government will be left with an asset that could be worth a fraction of the purchase price tomorrow! Which is a problem, because most of the government’s debt is owned by the US, in the form of Treasury securities: bills, bonds, notes and Treasury Inflation-Protected Securities. And when those securities mature, in weeks or years, the government has promised to pay the holders in cash, not in some fraction of a Bitcoin, or Hawk Tuah coin, or an NFT of an ape in a hat.
If investors wanted to invest in Bitcoin, or magic beans, or whatever volatile, risky security, they could just go buy some themselves. The only advantage Bitcoin has over other investments is that it can’t be traced, making it handy for criminal cartels. (The US actually already owns at least 173,991 Bitcoins, which were seized from Ross Ulbricht, AKA Dread Pirate Roberts, AKA another financial criminal That Man would like to pardon.) Otherwise, Bitcoin is illiquid, easily misplaced, untraceable … not investment features that, say, a teachers’ pension fund would try to be out there shopping for.
Investors and institutions buy government securities because they’re supposed to be risk-free. And if the government can’t pay up on its treasury securities, then the government would be in default, and that would be a big fucking problem. Mostly for the US government itself, but also for foreign governments, and institutional investors, such as many people’s retirement funds and mutual funds. And Warren Buffett, whose Berkshire Hathaway now owns more short-term Treasurys than the Fed itself does, $234.6 billion worth.
And who has a lot of Bitcoins? That is mostly a secret, they are known only by their wallet numbers, but very few investors: the top ten-thousandth of wallet addresses hold 27 percent of the coin. If they all sold, or even a few of them, the market would tank, so big Bitcoin holders are stuck. So Big Bitcoin holders would like it if the US government took their holdings and Rumpelstiltskin-ed them into real gold. And, if the government bought up $100 million worth, their investments would soar. Bitcoin is already up 40 percent YTD, just from the prospect.
One of these big holders is reportedly David O. Sacks, a billionaire South African-American investor and founding member of PayPal who That Man has appointed Chair of the President's Council of Advisors on Science and Technology and given the made-up job of “White House AI & Crypto Czar.” And as a “special government employee,” he does not require Senate confirmation or full financial disclosure. He’s buddies with Peter Thiel, natch, and the two of them wrote a book together, The Diversity Myth, about how diversity ruined Stanford University. Hilariously, just last year when Silicon Valley Bank collapsed, Davey Sacks was all for bank regulation, squeal-Tweeting “Where is Powell? Where is Yellen? Stop the crisis NOW. Announce that all depositors will be safe.” He added, “This will not help the little guy.”
LOL, the little guy! Well, now that you mention it, what would actually help smaller Bitcoin investors would be to define Bitcoin as a security, or a currency, instead of a commodity, like it’s regulated now. And then regulate it whichever way, so that it would not be legal for cryptobros to collude to pump dump Bitcoin on the US government or anybody else. But weird, the cryptobros do not want any crypto regulation at all, as that would be mean busybodies trying to stifle free speech! The free exchange between a fool and their money that they want to part them with.
Which kinda tips you off right there that it’s a scam, no?
Watch this excellent report from Chris Hayes the other night
[WSJ gift link / American Prospect / The Nation / Rolling Stone ]
I would just like to say that as a Stanford alum (class of 1991) I would like to invite Peter Thiel and David Sacks to kiss my entire Black ass.
The US continues to exist as a functioning entity because globally, US government bonds are the most secure place to put money. They function as trade currency, or the basis of trade, between most countries, especially when the US isn't one of the parties involved.
The #1 largest holder of US debt is US citizens, mostly through retirement funds.
The constant jabber that China will kill us all by dumping US Treasuries is bullshit, because doing so would render one of their larger assets worthless immediately. They'd rather sell those Treasuries slowly, and use House Money to buy resources, and build infrastructure to buy influence, all around the world.
Anything that shakes the confidence of those with money in the absolute reliability of US government bonds is suicidal for the US. Right this minute, while the world still uses our bonds as money, the US should fix our domestic problems like healthcare, education, housing, and infrastructure; to ease into a world after US domination.
But instead we're going to squander one of the greatest opportunities in history so a bunch of Ayn Rand fans who masturbate too much can say "I told you so" for a nano-second before it all implodes. Taking out the value of what they thought made them rich in so doing.