“With the introduction of the BITCOIN Act this summer, Senator Cynthia Lummis (R-Wyo.) called for the creation of a strategic Bitcoin reserve with the goal of reducing the government’s near-$36 trillion national debt. But can this kind of reserve actually solve our debt crisis?” FREOPP: “Can a bitcoin reserve save the US?”
Wow. This is one of the dumbest ideas I have seen in a long time.
For starters, sovereign reserve funds consist of investments of foreign currencies earn from a country’s exports (usually oil) that it did not chose to spend on imports, i.e. the result of a trade surplus. The U.S. has a trade deficient (we buy more from abroad than we sell) not a surplus and thus have no extra foreign currency to invest. The US would need to borrow the money to invest in bitcoin when the US government is all ready $36 trillion in debt. But if it were a relatively sure way of earning more than the cost of borrowing it, it could help reduce the national debt.
Is bitcoin such an investment? As I write this, bitcoin is selling at $96,479, a 146% increase from one year ago. Not bad to say the least. If instead the bitcoin fund had purchased bitcoin in 2013 (at about $450) and sold it at the end of 2016 ($434) it would have earned a bit less than nothing. But if it purchased it at the beginning of 2018 at $13,657 it would have lost its shirt by the end of the year at $3,709. In short bitcoin prices have been all over the map. They are not redeemable for anything, cannot be used to pay for anything with rare exceptions, and are thus a purely speculative form of gambling. WC: “Bitcoin” WC: “Bitcoin2”
Creating a bitcoin reserve would be beyond stupid.
But in the currency area there is competition for destructive stupidity. The US dollar is by far the most used currency for international transactions for good economic reasons. The US recently has been making the dollar less attractive by freezing Russian and Afghan dollar accounts: WC: “The dollar again” But rather than focusing on measures that would preserve or restore the dollar’s attractiveness (Make the Dollar Great Again), president elect Trump has threatened any country that does not use it with 100% tariffs. Such bullying is enough to embarrass even the worst bullies. WP: “Trudeau Trump tariffs”
Warren's space 
Warren, As before, I do not know how to log in for a Comment (no idea what my password is). I tried to leave this comment. (Nothing to add at the moment on Bitcoin !)
Trump’s apparent wish further to expand international use ofthe dollar, his usual bullying aside, suggests ignorance of internationaleconomics. To expand the external use ofthe dollar requires that the US run current account deficits (and capitalaccount surpluses), presumably larger than it does already. This directly contradicts Trump’s talk about usingtariffs to boost US manufacturing, and hence to reduce the US current accountdeficit.
A benefit to the US of vast use of the dollar is that itmakes it easier for the US to sell treasuries, and hence to run fiscaldeficits. But as the US owes $35 or $36 Trillion,perhaps stepped-up fiscal ease is not now the wisest monetary prescription?
When Bob Mundell proposed a Europe-wide currency in 1970, hesaid explicitly that he wanted the new currency to supplement the dollar (totake pressure off the dollar, and to reduce US current account deficits) in international usesas a reserve, as a store of value etc. Mundell saw his argument as building upon Keynes’ Plan in 1944, whichwould have created an international currency, bancor, along with a penalty-systemfor reducing or eliminating international imbalances.
The US will best uphold its national interest as a leader offormal or informal diplomatic and military alliances, these days especially inthe Far East. A go-it-alone boost in useof the dollar – combined with more fiscal deficits and more offshoring ofmanufacturing – aids neither the US nor the rest of the world.
Clark Johnson