Coinbase (NASDAQ: COIN) CEO Brian Armstrong has diagnosed America’s debt problem and prescribed a cure: The government should back the dollar with Bitcoin (CRYPTO: BTC), cap its own spending, and hope that AI-powered robots generate enough economic growth to bail everyone out over time.
His plan has the confident energy of a cryptocurrency exchange CEO recommending more cryptocurrency adoption. Funny how that works: When your favorite tool is a hammer, every problem looks like a nail.
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To be fair, Armstrong’s fundamental diagnosis is solid. Treasury Department figures show total public debt hit $39.69 trillion as of July 24. On July 1, when Armstrong posted his analysis, it was $39.39 trillion. If you’re keeping score at home, that’s roughly $300 billion of new debt in a month, or about $100 billion added every nine days.
Meanwhile, the government is paying real money to service all that borrowing. Interest payments have indeed surpassed the defense budget, as Armstrong notes.
Image source: Getty Images.
America tried this already (sort of)
Backing the dollar with Bitcoin holdings would essentially revive the gold standard that the U.S. abandoned internationally in 1971. The theory is simple: A fixed-supply backing asset limits money printing, which slows government borrowing.
The gold standard ran into bank panics, deflationary depressions, and the general economic vibe of the 1930s. Economists mostly agree that rigid monetary systems make recessions worse, not better.
Bitcoin adds a unique wrinkle: volatility. The cryptocurrency has experienced drawdowns of more than 70% multiple times in its history. A currency backing that swings wildly in value makes the economy more unstable, not less. That’s especially true when a single social media…
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