1 million bitcoin

Sen. Cynthia Lummis might have had a hand in the so-called Trump bump from Nashville on Saturday when she mentioned legislation for the U.S. government to hold bitcoin as a strategic reserve asset.

Between the lines: Folks started fever dreaming about all the buying — but one economist tells Axios the proposal isn't as daffy as it immediately seemed, and would involve only enough capital to finance the purchase of 1 million bitcoin.

Zoom in: The Cato Institute's George Selgin worked out the mechanics of what Lummis proposed and got more details in the process.

• Lummis' plan, according to Selgin, would create gold certificates to finance the purchase of 1 million bitcoin.

What they're saying: "Now that I know the true scale of what's being contemplated mechanically, there's no issues here," he said in an interview this morning with Axios.

• Essentially, what it would cost to finance a million-bitcoin purchase is small enough to be marginally relevant.

Context: That standing is in contrast to some initial reactions Saturday. (It helped that former president and GOP pick Donald Trump also vowed to "never sell" any of the bitcoin the government came to hold. See: Charted 👇)

• Imagine if what MicroStrategy did for corporate balance sheets caught on with world governments.

The intrigue: Lummis appears to be trying to achieve a reduction of government debt. But buying bitcoin to do that, Selgin says, appears a bit of a Rube Goldbergian way to do it — one could accomplish the same thing just by taking some gold, selling it and applying it to the debt.

• "What else could bitcoin be for — I don't think it would be a strategic reserve [asset] in the way that oil or some pharmaceutical products [are]," he said.

• "Those are things that you worry about not having enough of during war or conflict, and it's not obvious that the U.S. government needs to have a stockpile of bitcoin for that."

Some people hold bitcoin as insurance against say, the devaluation of the dollar.

• Yes, but: 👆Selgin says that doesn't apply to the Fed. "It does apply to ordinary individuals who hold dollars. That's a reason to not want to have the government stockpiling."

The big picture: If anything, Selgin says, bitcoin-as-strategic-reserve proposals are political gestures.

• "I don't buy the government-as-a-giant-mutual-fund argument. I don't buy the military, sort-of-strategic-reserve argument. I don't buy the hedge-against-risk argument. I buy the symbolic argument, for having the government show that it likes bitcoin."
• Perhaps, if anything, Trump's and Lummis' proposal is a salve for the "kind of hostile policies we've seen under the current administration," Selgin says.