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Renowned economist Peter Schiff criticized Senator Cynthia Lummis‘ (R-Wyo.) proposed legislation to establish a U.S. Bitcoin (CRYPTO: BTC) reserve, arguing that it would lead to inflation.
What Happened: On Monday, Schiff explained his point of view regarding the bill proposed by Lummis. The legislation aims to establish a U.S. strategic Bitcoin reserve by purchasing 1 million Bitcoin and holding it for 20 years. Schiff argues that the bill would necessitate the Federal Reserve to print more money to fund the purchase, leading to inflation.
“The Senator’s plan is to create inflation to buy Bitcoin,” Schiff stated
Lummis had introduced the Boosting Innovation, Technology, and Competitiveness through Optimized Investment Nationwide Act, or the BITCOIN Act, with an aim to to enhance the U.S. dollar's strength and address the national debt.
According to the proposed bill, one key method to fund the Bitcoin puchase program involves allocating $6 billion from net earnings remitted by the Federal Reserve to the Treasury from fiscal years 2025 through 2029.
Why It Matters: Schiff’s criticism comes hours after he dismissed Bitcoin as a potential reserve asset, stating that a reserve asset should have low volatility, be readily sold when needed, and have a more stable value than assets it’s supposed to hedge. His comments were in response to Bitcoin’s steepest fall in years.
Other economists have also criticized Lummis’ proposal. Justin Wolfers, a professor at the University of Michigan, described Lummis’ arguments for advocating Bitcoin as a strategic reserve as “one of the most amazing word salads” he’s ever read.
Price Action: At the time of writing, Bitcoin was trading at $55,809.52, recovering 2.53% in the last 24 hours, according to data from Benzinga Pro.
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Posted In: $BTC
