FameEX Hot Topics | Trump Suggests Using Bitcoin to Settle $35T National Debt

The United States government is currently adding $1 trillion to the national debt approximately every 100 days, heightening concerns about runaway inflation. Former President Donald Trump recently suggested using Bitcoin or a “crypto check” to address the United States government’s $35 trillion national debt and prevent a looming debt crisis.

In an interview with Maria Bartiromo of Fox News, Trump, the Republican Party’s 2024 presidential election nominee, praised the crypto industry and emphasized the importance of American innovation in digital assets. He warned that if the US does not lead in this area, other countries will. Trump hinted at Bitcoin’s potential role in managing the national debt: “Who knows, maybe we’ll pay off our $35 trillion dollar [national debt], hand them a little crypto check, right? We’ll hand them a little Bitcoin and wipe away our $35 trillion."

Trump’s comment underscores the potential of Bitcoin, a supply-capped asset, to mitigate US dollar inflation and transition to a system based on sound money and blockchain technology. As the US continues to devalue the dollar by printing more currency to service existing debts, Bitcoin’s price relative to fiat currency rises. To understand the $35 trillion debt, consider that it took nearly 200 years for the US national debt to exceed $1 trillion. Currently, $1 trillion is added to the debt roughly every three months due to deficit spending. In June alone, about 76% of all income tax revenue was used to pay interest on that debt, making interest payments one of the largest items in the US fiscal budget.

Bitcoin could potentially address this issue by gradually transferring value from the current US dollar system into the supply-capped digital asset, avoiding a full-blown currency collapse similar to the Weimar Republic in the early 20th century. Independent presidential candidate Robert F. Kennedy Jr. recently mentioned in an interview with Cointelegraph that establishing a Bitcoin reserve could help the government manage its national debt as BTC continues to appreciate in value.

Senator Cynthia Lummis has introduced a bill to establish a Bitcoin strategic reserve in the US to counteract the negative effects of excessive monetary printing and maintain the US's financial dominance in global markets and trade. The Wyoming Senator aims for the US Treasury to acquire 5% of Bitcoin’s total supply, holding the scarce decentralized asset for at least 20 years as a safeguard against monetary devaluation by the Federal Reserve and poor fiscal policy.

The proposal to use Bitcoin to address the national debt is not without its challenges. Bitcoin's volatility and the complexities of integrating it into the existing financial system pose significant hurdles. Moreover, the regulatory environment surrounding cryptocurrencies is still evolving, and any policy shift of this magnitude would require substantial legislative and public support. Nonetheless, Trump's suggestion has sparked discussions about innovative approaches to managing national debt and the potential role of cryptocurrencies in the broader financial landscape. As the debate continues, it remains to be seen whether such unconventional solutions will gain traction in the quest to stabilize the US economy.

Disclaimer: The information provided in this section is for informational purposes only, doesn't represent any investment advice or FameEX's official view.