Trump on Bitcoin: A Dollar Pressure Valve?
During a recent White House press conference, President Donald Trump discussed Bitcoin (BTC), suggesting its rise alleviates pressure on the US dollar. He stated, "It has become amazing...People are saying it takes a lot of pressure off the dollar, and it is a great thing for our country."
Bitcoin and the Triffin Dilemma
Digital asset researcher Anders X suggested Trump's remarks alluded to the Triffin Dilemma – the inherent conflict for a global reserve currency issuer (like the US) balancing trade deficits, global demand, and long-term currency value. The US maintains trade deficits to meet global dollar demand, but this necessitates money creation, diluting the dollar's value over time.
This is further illustrated by the continued climb in the Federal Reserve M2 money supply, a key indicator of the total US dollar supply. This inflationary pressure weakens the purchasing power of each dollar.
Trump's Past Bitcoin Proposals
Trump previously proposed using Bitcoin to pay off the national debt, highlighting the asymmetry between the inflationary dollar and Bitcoin's capped supply. However, critics argue that even owning all existing Bitcoin wouldn't cover the rapidly growing US national debt, which currently exceeds $37 trillion.
The "Nothing Stops This Train" Argument
Macroeconomist Lyn Alden's "nothing stops this train" phrase encapsulates the widespread belief that governments will continue printing money, ultimately devaluing their currencies. This aligns with the recent three-year low for the US Dollar Currency Index (DXY), reflecting weakening investor confidence in the US government's creditworthiness.
The declining dollar strength, coupled with elevated US government bond yields, signals growing concerns about the sustainability of the US national debt.
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Disclaimer: This article does not provide financial advice. Conduct thorough research before making any investment decisions.