The Question of Stockpiling Oil and Cryptocurrencies
Wise policymakers in any presidential administration would swiftly offload all barrels of oil currently stored in the Strategic Petroleum Reserve. Setting aside the fact that the U.S. Constitution does not address energy or energy policy, one must wonder why any government would hoard a globally available commodity, accessible at a market price determined internationally.
Understanding Embargoes
If the argument is that nations can impose embargoes as was seen in the U.S. during the 1970s, it’s important to revisit those lessons. The 1970s embargo did not prevent oil from reaching the United States. Embargoes are more symbolic than economically effective; the oil will continue to flow regardless of such actions.
Cryptocurrencies as Global Commodities
The dynamics of oil apply similarly to cryptocurrencies. Why would any government choose to stockpile digital assets that are readily available and can be accessed at a collectively agreed-upon market price?
The Nature of Digital Currency
While maintaining a strategic petroleum reserve disrupts fundamental economic principles, at least oil represents tangible wealth. In contrast, digital money merely reflects existing wealth without generating it. Therefore, why accumulate something that is already digitally accessible and available with a simple click?
The Trump Administration’s Strategy
Despite these considerations, the Trump administration is in the process of establishing a Strategic Bitcoin Reserve and Digital Assets Stockpile. But what exactly is strategic about this? What advantage would it provide in a crisis? Unlike dollars or gold, which have physical forms, digital coins offer no tangible value.
The Investment Opportunity Argument
Proponents, including President Trump or his supporters, might argue that a digital asset reserve presents a significant investment opportunity for the government, especially given that Bitcoin has a cap of 21 million coins, suggesting prices will only increase.
The Paradox of Value and Volatility
Regardless of Bitcoin’s historical fluctuations and the pitfalls of government acting as an investor, we cannot overlook what the idea of a strategic digital reserve implies about a government eager to establish one. This perception stands true whether the reserve’s value skyrockets or plummets. As discussions around cryptocurrencies surface, it highlights their limited role as mediums of exchange, reinforcing that money merely reflects the wealth generated by productive activities.
