PARIS, FRANCE – FEBRUARY 16: In this photo illustration, a visual representation of digital … More
Wise minds inside any presidential administration would quickly sell every barrel of oil presently stored in the Strategic Petroleum Reserve. Forgetting for a minute that there’s nothing about energy or energy policy in the Constitution, why on earth would any government stockpile a global commodity that, for being global, is always and everywhere accessible at a globally arrived at market price?
If the answer is that nations can embargo us as they did the U.S. in the 1970s, go back to school. Or better yet, don’t go back to school. The 1970s embargo in no way kept oil from reaching the United States. Embargos are symbolic as opposed to economic. No matter what happens, the oil will flow.
What’s true about oil is also true about cryptocurrencies. Why on earth would any presidential administration or any government stockpile what, for being digitally stored and globally available as is, will always be available at a globally arrived at market price?
It’s worth adding that while a strategic petroleum reserve vandalizes basic economics, it can at least be said that oil constitutes real, consumable wealth. Digital money is just digital money. It’s not an instigator of wealth, it’s merely an effect of wealth. Why stockpile effects that once again are already available digitally, and at the click of a mouse?
Yet the Trump administration is in the process of setting up a Strategic Bitcoin Reserve and Digital Assets Stockpile. Why? What’s strategic here? What would it do for us in an emergency? While you can’t eat dollars or money substitutes like gold, they’re at least tangible. What is strategic about a government stockpile of digital coins?
To which President Trump (or Trump partisans) might say the strategy in a bitcoin or digital assets reserve is that the federal government can get in on the ground floor of a huge investment opportunity. Don’t you know that bitcoin is limited to 21 million of the coins? They can only go up!
Ok, if we ignore bitcoin’s historical volatility in both directions along with the dangerous folly of government playing investor, if we rightly don’t care about government being right or not about the future of crypto, and if we can ignore just how strategically irrelevant and foolish stockpiling digital assets would be, we can’t ignore what the conceit of a strategic digital reserve would indicate about a government eager to start one. Crucial about the previous point is that it would be every bit as true if the reserve were to soar in value as it would be if the reserve were to collapse.
Whichever direction crypto goes, that there’s a direction being discussed exposes prominently just how limited cryptocurrencies are as exchange mediums. That is so because money is once again an effect of wealth. Nothing else.
Money circulates wherever actual wealth is as a mirror of the wealth produced. Translated, money’s sole purpose is as an agreement about value among wealth producers that enables them to exchange wealth of roughly equal value with each other. Yes, products for products with money as the measure facilitating wealth exchange.
Back to the digital coin reserve, implicit in what vandalizes reason is that coins deposited in the digital reserve “wallet” are going up, up and up some more. If true, good for those outside government in possession of digital wallets, and too bad for those outside government with digital wallets assuming the coins collapse.
Either way, what is volatile is the anti-money. Precisely because products for products underlie all trade refereed with “money,” volatile money or money going in one direction fails as an exchange medium. Which means the best the proponents of a strategic digital reserve can hope for is soaring digital coin prices that reveal them as the opposite of money, at which point someone might explain what’s good about giving government funds to play with so that they can have more money.
